A hiring freeze in October lifted market expectations for a Federal Reserve interest rate cuts, providing relief to U.S. stocks after Thursday's decline.
The U.S. economy added only 12,000 jobs in October, 211,000 fewer than in September. This marked the lowest monthly pace since December 2020 and sharply missed estimates of 113,000.
Market pricing now reflects a full probability of a 25-basis-point rate cut at next week's Federal Reserve meeting, with the likelihood of another cut in December surging to 85%, according to the CME FedWatch tool.
Hurricanes, Strikes Knock October Employment Down
Beyond the dismal October employment figures, which suggest a recession-like scenario, factors such as hurricanes and strikes have significantly disrupted hiring across the nation.
Hurricane Helene hit Florida's Gulf Coast on Sept. 26, followed by Hurricane Milton on Oct. 9, prompting widespread evacuations and disrupting multiple economic sectors.
"It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates," the Bureau of Labor Statistics (BLS) stated in its report.
Additionally, layoffs surged in manufacturing, rising to 46,000 — the highest since 2009, excluding the pandemic months of March and April 2020. "Manufacturing employment decreased by 46,000 in October, reflecting a decline of 44,000 in transportation equipment manufacturing largely due to strike activity," the BLS added.
Despite stagnant job growth in October, the unemployment rate held steady at 4.1%, indicating that businesses remain committed to retaining their workforce.
Equity ETFs Rise On Rising Rate-Cut Bets
- The SPDR S&P 500 ETF Trust (NYSE:SPY), tracking the S&P 500 index, rebounded 0.7% after Thursday's 1.9% slump.
- The tech-heavy Invesco QQQ Trust (NASDAQ:QQQ), replicating the Nasdaq 100, was 0.6% higher.
- Small caps outperformed, with the iShares Russell 2000 ETF (NYSE:IWM) soaring 1.2%.
- The Roundhill Magnificent Seven ETF (NASDAQ:MAGS) rose 1.4%. On Thursday, it tumbled 3.9%, marking the sharpest 1-day drop since late July.
- Sector-wise, the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) led gains, up over 2%, fueled by a 6% post-earnings rally from Amazon.com Inc. (NASDAQ:AMZN).
- The Direxion Daily AMZN Bull 2X Shares (NASDAQ:AMZU) skyrocketed by 13%.
- Rising expectations for Fed rate cuts fueled gains in real estate industries, with the iShares U.S. Home Construction ETF (NYSE:ITB) rising 1.8%.
- Semiconductors rebounded after tumbling by 3.9% on Thursday. The iShares Semiconductor ETF (NASDAQ:SOXX) rose 1.6%. Intel Corp. (NASDAQ:INTC) was among the best performers following better-than-expected results.
- The SPDR Gold Trust (NYSE:GLD) – the biggest physically-backed gold ETF – also rose 0.5%, rebounding after Thursday's 1.6% decline.
- The United States Oil Fund (NYSE:USO), which tracks West Texas Intermediate (WTI) crude performance, gained 1% amid rising geopolitical tensions in the Middle East following Iran's retaliatory attack on Israel.
- Biggest Gold ETF Posts Highest Monthly Inflows In 2.5 Years As Investors Rush To Safe Haven Ahead Of Presidential Election
Photo: Shutterstock
