Stocks closed higher Friday to extend a rally that saw the major market indexes move to their largest weekly gains of the year, as investors grew more hopeful that the Federal Reserve's interest rate hikes might have ended. The Dow Jones index rallied 5% for its best weekly showing since October 2022, the S&P 500 jumped 5.8% and the Nasdaq Composite surged 6.6%, the strongest week for those indexes since November last year.

U.S. nonfarm payrolls increased by 150,000 last month, 30,000 below forecasts and down from a downwardly revised 297,000 September increase. The recently resolved UAW strike is seen as the main culprit for the weakness. October payroll gains were below the 258,000 average monthly increase over the prior 12 months. Over the past 12 months, average hourly earnings have increased by 4.1%. The unemployment rate rose to 3.88%.

Treasury yields dropped across the board on Friday after October's jobs data, sending 10-year and 30-year rates toward their biggest weekly declines, respectively, since November 2022 and March 2020. The moves came as fed funds futures traders also priced in a 20.3% chance of a rate cut from the Federal Reserve by next March. The shorter-end more rate-sensitive 2-year yield was down 11 basis points to 4.86%.

The S&P Global US Manufacturing Purchasing Managers’ Index (PMI) posted 50.0 in October, up from 49.8 in September and in-line with the earlier released 'flash' estimate of 49.8 (any reading above 50 indicates expansion and below indicates contraction). Contributing to the uptick in the headline index was a renewed rise in new sales at goods producers during October. New orders increased for the first time in six months, and at the fastest pace since September 2022.

The U.S. service sector also increased marginally, showing signs of resuming its recent strength. The S&P Global US Services PMI posted 50.6 in October, up from 50.1 in September and down slightly from the earlier released 'flash' estimate of 50.9. The latest data signaled a marginal expansion in output at service sector firms, contrasting with a near-stagnation seen at the end of the third quarter. growth in output. Inflationary pressures subsided in October, as service providers recorded slower increases in input costs and output charges. Higher business expenses were often linked to greater salary, utility and supplier costs, but the overall pace of input price inflation eased to the weakest in three years.