US Hiring Nearly Tripled Forecasts, Fed Hike Odds Climb to 77%

At 8:30 a.m. ET on Friday (4:30 p.m. in Istanbul), the Labor Department released the October jobs report. Nonfarm payrolls rose by 165,000, against a Dow Jones consensus of 59,000.

The unemployment rate fell to 4.1% from 4.2%. August and September were revised up by a combined 84,000, with September lifted from 29,000 to 60,000.

As we wrote on October 2, the weak September report led markets to drop an October hike but keep a December one. The October data strengthened that second bet.

What Was Inside the Report

Average hourly earnings rose 0.4% to $38.00, the strongest monthly gain since January. The annual rate of 3.1% caught up with inflation.

Two sectors supplied two-thirds of the gain. Professional and business services added 70,000 and health care 42,000, with transportation and warehousing up 25,000 and manufacturing up 19,000. For the components, see Jobs Data.

The White House's Kevin Hassett read the report this way: "Demand for labor is skyrocketing."

On October 28 the Fed held its target range at 3.75-4.00%. The vote was 10-2, with Lisa Cook and Beth Hammack preferring a quarter-point hike.

On the Kalshi prediction market, the same odds rose from about 65% to 80%. The two measures use different instruments, but they point the same way.

The Bond Market Gave Back Half of Thursday

Treasury data show the 2-year yield fell 12 basis points on Thursday, from 4.58% to 4.46%. On the day stocks collapsed, Treasury yields fell sharply too.

On Friday the 2-year yield rose about 5 basis points to roughly 4.52%. The 10-year rose only about 3 basis points, holding near 4.87%.

The stock market did not read the report as a rates story. After Thursday, it read it as a relief story.

What the Rate Channel Costs a Stock

The shift in odds looks small, but it can be priced. The same arithmetic applies to equity valuation.

Thursday's selloff did not start with rates. As we wrote yesterday, the trigger was Bernie Sanders' call for a national data center moratorium. More: Rates and Bonds

Chip Stocks Won Back Part of Their Losses

According to CNBC, as relayed by StockTitan, Donald Trump said on Friday morning that he fully backs the AI build-out. The remark came about half an hour before the jobs report.

Jefferies' Jane Gibbons told Reuters: "We view Thursday's selloff as reactionary, not a fundamental reset."

The Philadelphia Semiconductor Index fell 12% on Thursday, its worst day since March 2020. Percentages are not symmetric: AMD fell 17.26%, then rose 11.04%, when erasing the loss required 20.9%.

Net changes are calculated from StockTitan's closing data; Micron rose 5.12% on Friday. Nvidia gained 2.78% and Intel 7.71%; per Yahoo Finance, the S&P 500 closed its worst week since June 5.

The past month of QQQ, which tracks the Nasdaq 100, puts the two-day swing in a wider frame.

What It Means for Investors

• Markets have largely priced a December hike; the 5 bp rise in the 2-year yield covers 2027 as well as December.
• Chip and software stocks, whose earnings sit in distant years, are the most rate-sensitive group, but politics moved them more this week.
• The early-December November jobs report and the December 8-9 decision come first; unemployment above 4.3% would weaken the hike case.
• The risk to this view is the data center debate turning into concrete state-level decisions, a far larger hit than the rate channel.

This article draws on the Labor Department's October employment release of November 6, the Fed's October 28 statement and Treasury daily yield curve data. CME and Kalshi odds are as reported by Beinsure and Money & Markets. Stock and index closes come from StockTitan and Yahoo Finance. The Trump and Gibbons remarks are CNBC and Reuters reports relayed by StockTitan. The valuation math is a simplified approach that ignores the term premium and changes in earnings.