US Markets Shake Off Early Dip as Jobs Data Signals Economic Strength

Wall Street bounced back today after a rocky start. The S&P 500 gained +0.42%, the Dow added +0.12%, and the Nasdaq climbed +0.41%, with December futures pointing to continued momentum at +0.39% and +0.48% respectively.

Here’s what flipped sentiment: October’s ADP employment report crushed expectations, showing private-sector job additions of +42K versus the forecast of +30K. Meanwhile, the ISM services index surged to 52.4—the fastest expansion in 8 months—beating estimates of 50.8 by a wide margin.

The trade-off? Price pressures are heating up. The ISM services prices paid index jumped to a 3-year high of 70.0, signaling inflation may not be fading as smoothly as hoped.

Tech took a hit today. Chip makers led a sector-wide reset, with Super Micro Computer tanking -8% after posting Q1 sales of $5.02B, way below the $6.09B expectation. The AI infrastructure correction that started last week is still grinding lower.

Rate cut odds shifting. Markets now price only a 62% probability of another -25bp rate cut when the Fed meets December 9-10, down from more bullish expectations earlier.

Earnings keeping the show running. Corporate results are beating forecasts at an 80% clip so far—best since 2021—but profit growth is slowing to +7.2% year-over-year, the smallest gain in two years. Revenue growth is also expected to decelerate.

Wild card: The government shutdown, now in its 6th week (longest ever), is dragging on sentiment and distorting economic data.

Treasury watch: The 10-year yield jumped +5.6bp to 4.142% as bond markets repriced on the stronger employment and services data. European yields are also climbing on hawkish economic signals.