U.S. employers added a surprising 165,000 jobs in October, easily topping the mean economist forecast of 59,000 and pushing the unemployment rate down to 4.1%, according to data released by the Labor Department on Friday. The stronger-than-expected labor data sparked a stock market comeback and altered interest rate expectations following a sharp tech-sector sell-off.
October Jobs Report Surprises Economists With Broad Growth
October’s job gains stretched across multiple sectors, reversing a recent pattern where health care carried the bulk of hiring. Professional and business services led the month with 70,000 new jobs, while health care added 42,000, transportation and warehousing grew by 25,000, and manufacturing added 19,000.
Prior months also saw significant upward revisions. August payrolls were revised up by 53,000 to 186,000, and September payrolls rose by 31,000 to 60,000, leaving combined employment gains for those two months 84,000 higher than initially reported. Average hourly earnings rose 0.4% for the month, pushing the annual increase to 3.1%.
The labor market’s resilience keeps the Fed focused on inflation and pushes the policy debate further toward a December rate hike,
said Fitch’s head of U.S. economics, Olu Sonola, in a note reported by Morningstar.
Following the data release, CME FedWatch odds priced roughly a 79% chance of a 25-basis-point rate increase at the December 9 meeting, up from about 70% prior to the open.
Tech Stock Slump Follows Democratic Midterm Sweep and AI Concerns
The strong employment figures landed on a market still absorbing a severe Nasdaq-led rout on Thursday. The Nasdaq Composite fell about 5.5% into correction territory—more than 10% below its recent peak—while the S&P 500 dropped about 4.4% and the blue-chip Dow shed roughly 1,800 points, or 3.4%, as reported by Bitcoin Magazine.
The Magnificent Seven erased over $1 trillion in market capitalization on Thursday. Nvidia dropped more than 9%, wiping out roughly $440 billion in value as investors reacted to concerns that the Democratic sweep in the midterm elections could slow the artificial intelligence data center buildout.
Despite those political headwinds, major technology and artificial intelligence firms signaled continued capital deployment. OpenAI Chief Financial Officer Sarah Friar told CNBC that her company intends to press forward with infrastructure investments regardless of the midterm election outcome, according to USA Today. Meanwhile, Google announced plans to invest $17 billion in a Wyoming data center.
There will be a temporary hiccup. Let’s not forget there are still a few red states left. If the blue states make it too difficult, data centers not only employ people, but they also pay a lot in taxes. I think you’ll see the left move more to the center on this issue. We’ll just have deals where they bring their own power, cool the facilities and reuse water.
Nancy Tengler, chief executive and chief investment officer at Laffer Tengler Investments
Other market strategists pointed out that heightened regulatory oversight often benefits established players. Janus Henderson Head of Technology Research and Portfolio Manager Denny Fish noted in a commentary carried by USA Today that large companies typically have the financial firepower and staff to withstand and comply with more rigorous oversight.
Cryptocurrency Markets React to Equity Volatility and Liquidations
Bitcoin traded tightly alongside the broader risk-off equity complex. After touching a seven-week low of $75,131 overnight, the cryptocurrency briefly spiked above $76,100 following the employment release before settling near $75,500, according to Bitcoin Magazine Pro data.
Borrowed money unwound rapidly across digital asset exchanges, with more than $1 billion in crypto positions liquidated over a 24-hour window. Most of those liquidations hit long bets established during Wednesday’s short-squeeze bounce toward $80,000. U.S. spot bitcoin exchange-traded funds registered $430.2 million in net outflows on Thursday, led by approximately $200 million withdrawn from Fidelity’s FBTC and roughly $105 million from BlackRock’s IBIT, bringing weekly redemptions through Thursday to about $870 million.
XM analyst Raffi Boyadjian offered a contrasting perspective on political control in remarks covered by Morningstar: Ironically, traders are going with the notion that [a Democrat-controlled Congress] may not necessarily be such a bad thing for the AI hyperscalers, as they are forced to scale down their costly investment plans that were eating into their cash flow.
Equities Rebound While Markets Monitor December Federal Reserve Decision
Following the morning employment data, major stock indices rebounded from their mid-week losses. Around 1 p.m. ET, the Dow Jones Industrial Average dropped just 0.12% to 51,462.34, the S&P 500 rose 0.57% to 7,395.45, and the tech-heavy Nasdaq gained 1.21% to reach 24,608.418.
The economy is doing well,
Chris Zaccarelli, chief investment officer at Northlight Asset Management, wrote in an email published by USA Today. It is growing at 3.4%, corporate earnings are up more than 25% year-over-year – and it can handle higher oil prices and higher interest rates. Despite an oil shock and a Federal Reserve that is raising rates, albeit slowly, the unemployment rate actually dropped and the 4.1% level is at or close to full employment.
The next major labor update is scheduled for release on December 4, exactly five days before the Federal Open Market Committee announces its December 9 policy decision.
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