The latest on markets, the jobs report and the economy

The Nasdaq MarketSite in New York City on Friday, October 27.

Stocks gained Friday after a weaker-than-expected jobs report, fueling hopes that the Fed’s punishing rate hikes have done their job to slow the economy – and inflation along with it. Wall Street is now betting rate hikes are over with, helping all three major indexes end the first trading week of November higher.

For the week, the Dow rose 5.1%. The S&P 500 gained 5.9% and the Nasdaq Composite added 6.6%, both marking their best weekly gains since last November.

All 11 sectors of the S&P 500 ended the week higher.

The market’s rally this week comes after the S&P 500 in October logged its longest streak of monthly declines since 2020, as investors worried about geopolitical strife and that the Federal Reserve would keep rates higher for longer.

Stocks gained Friday after the October jobs report showed that the US economy added 150,000 jobs last month, falling below expectations but still notching a solid month of growth after September’s gangbusters, downwardly-revised total of 297,000 jobs.

Wage growth also moderated, showing some inflationary pressure is easing. Average hourly earnings added seven cents in October from the prior month, or 0.2%, to $34, marking a slower pace than September’s 0.3% gain. Annual wages rose 4.1% last month, the slowest pace since the 3.9% gain in June 2021.

“Slower growth is still growth, and this jobs report is still in the sweet spot. We do see signs, however, that more weakness may be ahead,” said Brad McMillan, chief investment officer at Commonwealth Financial Network.

Treasury yields continued their slide on Friday, accelerating their cooldown from earlier this week after the Fed held interest rates steady for a second consecutive time.

Expedia shares jumped 18.8% after the company reported an earnings beat for the third quarter.

Paramount Global shares added 15.4% after the company beat earnings and revenue expectations for its latest quarter.

Berkshire Hathaway Class A shares rose 0.7% ahead of the Warren Buffett-led company’s third-quarter results due Saturday morning.

Apple was an outlier of Friday’s broad-based rally, with shares falling 0.5% after the iPhone maker issued a disappointing sales outlook for the December quarter on Thursday after the close.

The Dow added 222 points, or 0.7%.

The S&P 500 gained 0.9%.

The Nasdaq Composite rose 1.4%.

Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, in New York City, in May.

The October jobs report hit the right notes for the Federal Reserve, but plenty more data is needed, Minneapolis Fed President Neel Kashkari said Friday.

“This suggests that the labor market is slowing, which we were looking for,” Kashkari told CNN’s Poppy Harlow during an Economic Club of Minnesota event Friday in downtown Minneapolis.

While the more moderate pace of job growth is a helpful data point that shows the labor market is getting back into a better balance, Kashkari said it’s just one piece of data.

“It gives us more comfort that the economy is moving back into balance, but I don’t want to overreact to one jobs report,” he said.

Upcoming data, especially as it relates to the labor market, wages and inflation, will be closely eyed by the Fed, he said.

“In case you haven’t noticed, our forecasting hasn’t been that great in the last few years, and so we just need to keep watching the actual data,” he said.

Federal Reserve Chairman Jerome Powell appears on television screens on the floor of the New York Stock Exchange in New York on November 1.

The stock rally gained steam on Friday, as investors continued to parse the cooldown in the October jobs report.

The Dow rose 314 points, or 0.9%. The S&P 500 gained 1.2% and the Nasdaq Composite added 1.5%.

All 11 sectors of the S&P 500 were higher except for energy, as oil prices continued to sag.

Treasury yields continued to decline as investors grew optimistic that the Federal Reserve is done hiking interest rates this year. The yield on the 10-year Treasury note was last at about 4.54%, well below the key 5% level it briefly touched last month.

The three major indexes are on pace to close the week higher, a promising start to November after the benchmark index in October notched its longest monthly streak of declines since 2020.

Richmond Federal Reserve President Thomas Barkin saw Friday’s jobs report, which showed hiring slowed last month, as a win for the central bank.

“It was welcomed to see the gradual lessening,” Barkin said in an interview with CNBC on Friday morning. “I think that’s what those who would like to not see another rate hike would want to see,” he added.

Barkin’s comments come days after the central bank held interest rates steady for a second consecutive meeting. Traders are under the impression that the Fed is done hiking even though officials have left the door open for more.

Barkin has not been voting at Fed meetings this year but will be starting in January for the subsequent meetings next year.

The Wall Street subway station near the New York Stock Exchange on October 20.

Here’s what Wall Street has to say about the latest jobs report:

“The data is a nod to the Fed as it shows monetary policy is working and should bring less debate on whether policy is sufficiently restrictive,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

“The overall take from the report is the labor market is beginning to cool in a way which should allow inflation to continue to moderate and the Fed to stop raising interest rates,” said Steve Wyett, chief investment strategist at BOK Financial.

“We believe the recession is delayed for now as fiscal policy continues to do the heavy lifting,” said Alexandra Wilson-Elizondo, deputy CIO of multi-asset solutions at Goldman Sachs Asset Management.

“Despite the cooler jobs report and emerging cracks in the labor market, the unemployment rate is still near 50-year lows, and we would expect that the Fed will remain vigilant in its inflation-fighting strategy,” said Stephen Rich, CEO at Mutual of America Capital Management

Attendees at a career fair hosted by the New Hanover NCWorks and the Cape Fear Workforce Development Board in Wilmington, North Carolina, on June 20.

The unemployment rate for Black women older than 19 spiked to a seasonally adjusted 5.3% in October, up from September’s 4.5% rate. It was the largest month-over-month increase in unemployment among racial categories of adults 20 years old and over.

Historically, Black women have faced significant disparities in the job market — from the wage gap with White workers to being overrepresented in lower-wage industries.

Black and Hispanic workers are also more likely to lose their jobs during economic downturns. However, the US economy isn’t currently in a recession, with economic growth still running hot.

Meanwhile, the unemployment rate among Black men older than 19 dipped to 5.3% in October, down from September’s 5.6% rate. Among Hispanic workers, unemployment overall edged higher to 4.8% from 4.6% during the same period, with Hispanic men and women older than 19 seeing declines.

The unemployment rate for Hispanics of both sexes between the ages of 16 and 19 jumped to 16.6% in October from 11.4% in September. 

Last month, the unemployment rate ticked up slightly from 3.8% to 3.9%.

By definition, the unemployment rate captures the share of unemployed people as a percentage of the labor force. The labor force is the total number of people employed and unemployed. To be considered unemployed, you don’t necessarily have to have been laid off recently.

The Bureau of Labor Statistics classifies someone as unemployed if they aren’t working but are available for work and made a specific effort in the past month to find a job. If they don’t satisfy that criteria, they aren’t considered part of the labor force.

Last month, the number of unemployed people rose by 146,000 to 6.5 million. While the number of employed people rose by 150,000 to nearly 157 million. The net effect of that meant the labor force grew by 296,000 people to 167.7 million. So, mathematically, when you divide 6.5 million by 167.7 million, you’ll arrive at the 3.9% unemployment rate.

A 'Now Hiring' sign is displayed outside a resale clothing shop on June 2 in Los Angeles, California. 

These days, a “good” jobs report isn’t one where tons of people got hired in a given month.

That might seem ironic, given that hiring is often taken as a sign of an economy’s strength. But after a remarkable recovery from the pandemic-induced recession, monthly job gains have, for the most part, remained surprisingly robust.

That’s been somewhat problematic because strong job gains can be counterproductive to the Federal Reserve’s goal of getting inflation down to its target of 2%, since it can lead to higher wages.

But October’s jobs report, which showed that 150,000 people were hired, could be interpreted as the ideal level of gains. It’s still quite a robust number, but at the same time, it’s a big decline from September’s downwardly revised 297,000 gains.

While it may feel discouraging for job seekers to come across fewer job openings, it’s actually a good sign for them, Kermit Schoenholtz, New York University professor emeritus and the former chief economist at Citigroup, previously told CNN.

Job seekers would be much better served by “a sustainable job market where it’s easier to make predictions about the future,” he said. The job market we’ve seen post-pandemic is not sustainable, he added.

US workers’ wage gains continued to slow last month, showing some easing underlying inflationary pressure.

Average hourly earnings edged up seven cents in October from the prior month, or 0.2%, to $34. That was a slightly slower pace of growth than September’s 0.3% gain. On an annual basis, wages were up 4.1% last month, the slowest pace since the 3.9% annual gain registered in June 2021.

The Federal Reserve is paying close attention to the state of the labor market. Fed Chair Jerome Powell said in his news conference Wednesday after officials unanimously voted to hold interest rates steady that he’s pleased to see that wage growth has cooled markedly over the past year, though he noted that “it’s not the case that wages have been the principal driver of inflation so far.”

Still, a slowing job market generally helps the Fed tame inflation because it crimps demand and eases pressure on employers to jack up wages to recruit talent in a tight labor market. Higher labor costs are typically passed on to consumers.