U.S. stock benchmarks rebounded after a tense week while the retreat in Treasuries extended as Wall Street debated the odds the Federal Reserve will raise interest rates again this year.

The S&P 500 advanced 1.2 per cent Friday with the benchmark snapping its four-week losing streak after a last minute deal with the autoworkers union helped buoy sentiment. The Nasdaq 100 jumped 1.7 per cent with large-cap tech names, including Microsoft Corp., Apple Inc. and Nvidia Corp., powering the index higher. 

Yields on 10-year and 30-year Treasuries calmed after touching 2007 highs near 4.9 per cent and 5.1 per cent, respectively as global bonds fell for a fifth straight week. An unexpected surge in hiring left swaps traders are pricing in a roughly 50/50 chance of a rate hike by December.

The nonfarm payrolls report showed employers quickened the pace of hiring, with 336,000 jobs being added in September — more than double economists’ estimates. The unemployment rate held steady at 3.8 per cent, data from the Bureau of Labor Statistics showed Friday.

“The overall picture is rather ‘goldilocks’-like, with strong jobs growth coming alongside continued disinflation,” according to the economics desk at ABN Amro, which cautioned against relying too much on a single month’s data. 

“We continue to think the fed funds rate has peaked and that July was the last hike of the cycle,” they added. “If anything, the recent jump in bond yields adds to our conviction that the Fed will refrain from further hikes, as the rise in yields represents a major additional tightening of financial conditions.”

Seema Shah, chief global strategist at Principal Asset Management, came to a different conclusion after the data. “The economy is almost too hot to handle and the Fed will need to respond with more rate hikes, it reinforces the higher-for-longer narrative that has been spooking bond markets for the past few weeks,” she said. 

The bond selloff has been hammering risk assets from stocks to corporate credit on concerns that central banks will keep interest rates elevated longer than expected.

Mohamed El-Erian, the chief economic adviser at Allianz SE, also remained cautious.

“Something is likely to break,” he said on Bloomberg Television. The Bloomberg Opinion columnist said Friday’s job numbers were consistent with his call for a possible recession.

Markets have gyrated on conflicting U.S. labor data this week: job-openings overshot estimates, while a measure of private employment from ADP was weaker than forecast.

Traders bet big on volatility ahead of Friday’s payrolls number, though the wager hasn’t really paid off yet. They also have record sums riding on the outcome of November’s Fed meeting as investors and policymakers debate the likelihood of a further rate increase this year. 

In commodities, oil posted its biggest weekly drop since March while gold slumped for the second week in a row.

Next week, all eyes will be on Thursday’s consumer pricing data as well as earnings reports from some of Wall Street’s biggest banks, including JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.2 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 1.7 per cent
• The Dow Jones Industrial Average rose 0.9 per cent
• The MSCI World index rose 1.1 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 per cent
• The euro rose 0.4 per cent to US$1.0589
• The British pound rose 0.4 per cent to US$1.2242
• The Japanese yen fell 0.6 per cent to 149.33 per dollar

Cryptocurrencies

• Bitcoin rose 1.8 per cent to US$27,977
• Ether rose 1.9 per cent to US$1,647.22

Bonds

• The yield on 10-year Treasuries advanced eight basis points to 4.79 per cent
• Germany’s 10-year yield was little changed at 2.88 per cent
• Britain’s 10-year yield advanced three basis points to 4.57 per cent

Commodities

• West Texas Intermediate crude rose 0.6 per cent to US$82.80 a barrel
• Gold futures rose 0.7 per cent to US$1,844.30 an ounce