Markets Recover on Stronger Jobs Data
U.S. markets climbed Wednesday as investors digested fresh labor data showing the private sector added 42,000 jobs in October, according to the ADP payrolls report. The number exceeded expectations and marked a sharp turnaround from the previous month’s decline, easing fears of a labor market slowdown.
The S&P 500 rose 0.7%, the Nasdaq Composite gained 0.9%, and the Dow Jones Industrial Average advanced 0.6%. The rebound followed Tuesday’s steep sell-off, when valuation concerns and liquidity fears rattled investors.
The better-than-expected jobs data provided a modest boost to confidence, suggesting parts of the economy remain resilient despite rising pressure from the ongoing federal shutdown, which has now become the longest in U.S. history.
Fed Signals Openness to December Rate Cut
With key government data frozen during the shutdown, the Federal Reserve is leaning more heavily on private reports like ADP’s to gauge economic strength.
Newly appointed Fed Governor Stephen Miran said he supports another rate cut at the December meeting, calling it a “reasonable” move to sustain momentum as inflation trends lower and job growth stabilizes.
The Fed lowered its benchmark rate by 25 basis points last week to a range of 3.75%–4.0%, and Miran has argued for a more aggressive half-point cut to achieve a neutral stance—policy that neither stimulates nor restrains growth.
Markets are now pricing in a roughly 70% probability of another cut before year-end, as investors continue to weigh the effects of tariffs, supply chain disruptions, and consumer fatigue.
Tariffs and Shutdown Tensions Weigh on Outlook
The Supreme Court heard arguments Wednesday in a major case challenging the president’s authority to impose sweeping tariffs, marking a pivotal test of executive power. Justices pressed administration lawyers on whether broad tariff measures violated congressional trade authority, potentially reshaping how future trade policies are implemented.
Meanwhile, the government shutdown entered its 36th day, extending its economic drag and delaying key reports including the official jobs and inflation data. Economists estimate the shutdown is costing the U.S. economy roughly $15 billion per week, while travel disruptions and worker furloughs continue to ripple across sectors.
Earnings and Sector Moves
Investors turned their attention to key corporate earnings for further signals on economic health.
- Qualcomm (QCOM) reports after the bell, with results expected to provide new insight into the AI hardware cycle and global chip demand.
- McDonald’s (MCD) posted stronger U.S. sales but warned of consumer weakness in lower-income brackets.
- Energy and industrials saw modest gains, while tech remained volatile ahead of major chip earnings.
WSA Take
Markets caught a short-term break thanks to improving job data—but sentiment remains fragile. With tariffs under legal review, a record-breaking government shutdown, and mixed earnings across tech, investors are navigating a delicate balance between resilience and overvaluation.
The next major catalyst may come from the Federal Reserve’s December decision, as policymakers debate whether to extend rate cuts to cushion an economy running on uneven footing.
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