Key Highlights

  • Teradyne closed at the very top of the S&P 500 leaderboard on Friday, ahead of Hewlett Packard Enterprise, Super Micro Computer and Monolithic Power Systems, after a weak September payrolls report eased rate-hike fears.
  • The Bureau of Labor Statistics reported just 29,000 jobs added in September against roughly 84,000 expected, with combined downward revisions of 60,000 jobs to July and August.
  • The Federal Reserve raised rates on September 16 for the first time since 2023; Friday's data sharply cut the odds of another hike at the October 27-28 meeting.
  • The S&P 500 added 56.27 points to close at 7,722.72 and the Dow gained 250.40 points to 51,176.96, with ten of eleven sectors higher and technology leading.

Teradyne (NASDAQ:TER) finished Friday as the single best performer in the S&P 500 after a weak September payrolls number cooled fears of another Federal Reserve hike and sent semiconductor stocks racing higher. Teradyne, the company whose machines test chips before they are shipped into phones, cars and AI servers, was the standout name on Wall Street on Friday. Shares rocketed higher and closed at the very top of the S&P 500 leaderboard, ahead of Hewlett Packard Enterprise, Super Micro Computer and Monolithic Power Systems. The trigger was not a Teradyne press release. It was the US jobs report.

The Jobs Number That Flipped the Mood

At 8:30am New York time, the Bureau of Labor Statistics said the economy added just 29,000 jobs in September, far short of the roughly 84,000 that economists had pencilled in. Private employers added only 46,000. Revisions shaved a combined 60,000 jobs off July and August, with July now showing an outright loss of 10,000. The Unemployment rate ticked up, and average hourly Earnings of $37.81 showed the slowest annual gain since May 2021.

For a market worried about a Federal Reserve in hiking mode, that was welcome news. The Fed under Chair Kevin Warsh raised rates on September 16, its first increase since 2023, as the oil shock from the US-Israel war with Iran pushed Inflation back up. After Friday's data, traders sharply cut the odds of another hike at the October 27-28 meeting.

Why Chip Testers Moved the Most

Market commentary grouped Teradyne with MACOM, Texas Instruments, Semtech and Amkor as semiconductor names that rallied on the weak payrolls report and the early drop in Treasury yields. Teradyne carries extra Leverage to that story because its testers are needed for the advanced processors and memory going into AI data centres. When investors feel more confident about the chip cycle, the equipment that checks those chips tends to get bid up hard.

Commentary also pointed to the company's Partnership with Tokyo Electron, a collaboration first announced in June. That tie-up combined Teradyne's UltraFLEXplus tester with Tokyo Electron's Prexa prober to build an integrated test cell for AI and data-centre chips.

The broader chip complex was on fire. Nvidia hit a record high during the session after Morgan Stanley named it its top semiconductor pick. Arm, Monolithic Power, Microchip, KLA, Intel and AMD all posted strong gains. The Nasdaq-100 notched a record close at 30,807.93, up 306.37 points, while the Nasdaq Composite touched an intraday all-time high before settling at 27,190.86.

A Rally With a Narrow Base

The S&P 500 added 56.27 points to 7,722.72 and the Dow gained 250.40 points to 51,176.96. Ten of eleven sectors rose, with information technology among the leaders.

Not everything was rosy. Treasury yields fell right after the report but reversed to close higher, leaving the 10-year near its highest level since 2002. Most S&P 500 stocks still trade below their 50-day moving averages, a sign the gains remain concentrated in chips and AI hardware.

The Fed Meeting Is the Next Test

The next big test for Teradyne and its peers is the Fed meeting on October 27-28. Bill Adams, chief economist at Fifth Third Commercial Bank, said that the Fed's next decision in late October is live and would probably be swayed by the September CPI and PPI reports, geopolitical developments, and prices at the pump.

Earnings season also gets under way soon, with PepsiCo on October 8, Delta on October 9 and the big banks on October 13 and 14. Analysts expect strong double-digit earnings growth for S&P 500 companies in the third quarter, having raised their estimates during the quarter rather than cutting them. For a stock like Teradyne, any fresh read on AI chip Demand will matter as much as the macro data.