U.S. stocks rose in early trading as the non-farm payroll report cooled interest rate hike expectations, but inflation data may be the deciding factor.

The U.S. job market is rapidly cooling, driving stock prices up and bond yields down. The market speculates that the Federal Reserve may not be forced to raise interest rates in the short term. At 9:33 AM New York time, the S&P 500 rose by 0.4%, the Nasdaq 100 was up by 1.1%, and the Dow Jones remained basically flat. After two days of declines, the stock market is poised for the S&P 500 to achieve its best single-week performance since April. Bret Kenwell of eToro stated that the latest employment report is weak enough to alleviate some of the Fed's interest rate pressures, but not weak enough to indicate that the labor market or the overall economy is stalling. He said, Inflation remains a concern, but todays data may give decision-makers more reasons to be patient and provide investors with more room to invest in risk assets. Brent Wilsey of Wilsey Asset Management pointed out that Friday's employment report not only fell far short of expectations but also indicated a decrease in jobs in July, putting the Fed in a dilemma as inflation remains high and sticky. Lindsay Rosner of Goldman Sachs Asset Management noted, While the upcoming inflation data will have the final say, the slowdown in job growth supports the Fed's decision to keep interest rates unchanged in September. Ellen Zentner of Morgan Stanley Wealth Management remarked that the weak non-farm payroll data may ease the pressure for the Fed to raise rates at its September meeting, but next week's inflation data could still be a decisive factor. She added, If the inflation data exceeds expectations, it may not be enough to dampen calls for rate hikes within the Fed, or reduce market expectations for rate increases, even if the labor market cools.