On Friday, the US jobs report came out and... nobody expected it to look like this.
Analysts were expecting 84,000 new jobs for September. We got 29,000. Yes. JUST 29,000.
Normally, this should have scared the markets. Instead, stocks rose. And the Nasdaq hit a new all-time high during the day.
“How can bad news be good news?” you may be wondering. The answer lies with the Fed. And by the end, we'll see how AI is already changing jobs on Wall Street.
THE LABOR MARKET
The 29,000 new jobs in September are well below the average of the past 12 months, which was 45,000 per month.
And unemployment rose to 4.2%, from 4.1%.
And as if that wasn't enough, we also had revisions. July, which initially showed +21,000 jobs, was revised to MINUS 10,000. August fell from 162,000 to 133,000. In total, that's 60,000 fewer jobs than we previously thought.
In fact, Thomas Simons of Jefferies says that the “strong” August was simply a rebound after a very weak June and July.
“And where did the few jobs we did get come from?” you may be wondering. Mainly healthcare (+17,000), construction (+11,000), and manufacturing (+9,000). On the other hand, government lost 17,000 jobs, temporary employment lost 11,000, information technology lost 10,000, and financial services lost 7,000.
Of course, there is a big “but.” The household survey, which is used to calculate the unemployment rate, showed 406,000 more employed people and 485,000 more people in the labor force.
So what does that mean? It means unemployment rose mainly because more people entered the labor market looking for work.
The problem is wages. They rose just 0.1% during the month and 3% over the year, the lowest increase since May 2021. And as Heather Long of Navy Federal puts it, this increase is “completely wiped out by inflation.”
THE FED'S DILEMMA
And this is exactly where the Fed comes into play. Because there is something many people haven't realized. The Fed is not cutting interest rates right now. It's RAISING them. In September, it raised them by 0.25%.
“And why is it raising them?” you may be wondering. Because inflation persists. Core inflation is at 3%, while the target is 2%. And Fed officials see it as a greater threat than the labor market.
In simple terms, a weaker labor market means fewer reasons for another rate hike. That's why the probability of rates remaining unchanged at the October 27-28 meeting jumped to 82.8%.
Simons put it clearly: these numbers are “the final nail in the coffin” for an October hike.
But pay attention. This does not mean the rate hikes are over. Markets now give a 67.3% probability of another 0.25% hike in December. And Bill Adams of Fifth Third says the numbers were not weak enough to shift the Fed's focus away from inflation. September inflation data, gasoline prices, and geopolitical developments will matter much more.
HOW THE MARKETS REACTED
And now let's get to the markets. But the real drama these days isn't happening in stocks. It's happening in bonds.
The yield on the US 10-year Treasury rose above 5.3%, its highest level since 2002. And it was on track for an eighth consecutive week of gains.
So the weak numbers came as a relief. Yields fell immediately after the announcement. But then... they turned higher again. And they pulled stocks down from the day's highs.
Even so, the day ended positively. The Dow Jones rose 0.5%, the S&P 500 gained 0.7%, and the Nasdaq rose 1.2%, with technology stocks taking center stage.
“So what did the market ultimately want?” you may be wondering.
I'll put it very simply: the market wanted “neither too hot nor too cold.”
AI IS CHANGING JOBS
And this brings us to the most interesting part. Remember the 10,000 jobs lost in information technology? They disappeared at a time when fears about AI are growing.
At the same time, specialized contractors for nonresidential construction added 12,000 jobs, probably thanks to the boom in construction for AI infrastructure.
“So does AI destroy jobs or create them?” you may be wondering.
The truth is that before it takes jobs away, it appears to be creating them first. And Wall Street is the best example.
Job postings for AI positions at banks such as JPMorgan, Citigroup, and Capital One increased 49% compared with 2025. They reached 139,819.
And the most sought-after skill? AI agent orchestration, with postings surging 1,721%.
What exactly is that? In very simple terms, a bank creates a team of “digital employees.” One checks the data, another analyzes a document, and a third checks whether everything complies with the rules. And someone has to make them work together.
But that's not all. Demand is also increasing for people who set boundaries around all of this. Mentions of “responsible AI” rose 657%.
The average base salary for a generative AI director? About $190,000.
And Jamie Dimon of JPMorgan is already talking about “massive redeployment plans” for employees.