October Jobs Blowout Tests Market Bounce as Yields Rise

Grant Calloway

Welcome to the Bull Sheet podcast. I'm Grant Calloway. Yesterday the Nasdaq lost five and a half percent, and this morning the government handed us a jobs number that nobody ordered. The economy added one hundred sixty five thousand jobs in October. The consensus was sixty five thousand. That's not a beat. That's a lapping.

Grant Calloway

Digging in, per the Labor Department's report as cited by Schwab, unemployment ticked down to four point one percent from four point two. Average hourly earnings rose point four percent on the month, against point three expected, and they're up three point one percent over the year. August and September were revised up by a combined eighty four thousand. Professional and business services added seventy thousand. Health care added forty five thousand. Strong all around.

Grant Calloway

Now, good news on Main Street is a headache on the Fed's desk. December rate hike odds on CME FedWatch climbed to about seventy three percent, up from around sixty during Thursday's rout. Headline inflation is running near three point seven percent, so the Fed isn't exactly short on reasons. Schwab's Collin Martin still expects a hike in December, and he also said this report may calm some of the fears from yesterday's AI sell-off.

Grant Calloway

On the tape, futures are pointing to a bounce after Thursday, when the S&P fell four point three six percent, its worst day since April 2025. The Dow dropped eighteen hundred thirty three points. Tech sank seven point three percent. But yields are putting a lid on the enthusiasm. The ten year jumped to roughly four point eight eight to four point nine percent, bouncing off two month lows near four eighty three. The two year sits near four fifty five, and the thirty year around five twenty seven.

Grant Calloway

The dollar index is up about two thirds of a percent, near one oh two twenty two. Gold gave back fifty two eighty to about four thousand sixty. WTI crude is near ninety one dollars. The VIX eased to around twenty six after topping twenty eight yesterday. And Bitcoin sits near seventy five thousand eight hundred, after sliding about five percent Thursday.

Grant Calloway

Movers, quick. Lam Research is up over eleven percent pre-market after authorizing a twenty five billion dollar buyback. AMD is up about eight percent after losing seventeen yesterday. Nvidia is up four to five. DraftKings is down more than twenty five percent on misses across earnings, revenue and sportsbook sales. Lyft is off five percent on a miss, though gross bookings hit a record, up seventeen percent. Staples are giving back yesterday's shelter: Pepsi and Coke down about two percent, Walmart down two point three. Bloom Energy is up around ten. And Enbridge reported, with its quarterly dividend at ninety seven Canadian cents.

Grant Calloway

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Grant Calloway

Time for Bull versus Bear. I'll argue both, and then tell you where I land. First, the bull. A hundred sixty five thousand jobs, upward revisions, wages firm. The three month average is a brisk one hundred thirty seven thousand. That's an economy that can carry weight. Thursday looked like a flush: semiconductors down about thirty percent from their peaks, the most net retail selling since the 2020 Covid collapse, per Schwab. And Schwab notes that in past Nasdaq corrections of ten percent or more, the index recovered its high within six months about sixty percent of the time. Past isn't precedent, but that's the bull's evidence.

Grant Calloway

Now the bear. Good news is bad news. Hike odds at seventy three percent, the ten year pushing toward five. Wage growth of three point one is still below inflation of three point seven, but a point four monthly print gives the Fed a reason to stay hawkish. Add oil near ninety one, and high yield spreads that widened about fifteen basis points Thursday, a move only matched twice in the past year. On top of that, the Democratic sweep raises questions about AI regulation and data center buildouts. Schwab's Nathan Peterson said the blue sweep exacerbated concerns on funding the buildout.

Grant Calloway

Where do I land? I've traded through two crashes, and one good day after a rout rarely ends the argument. Sell-offs like yesterday's don't often end up one and done. The bull has the better jobs data. The bear has the better calendar, because credit is flashing and CPI comes Tuesday. I'd watch whether the bounce holds when yields stay up. That's the tell.

Grant Calloway

On deck. At ten a.m. Eastern, preliminary University of Michigan sentiment, expected at forty seven point two, versus forty eight in October. Watch longer term inflation expectations, which were three point five percent last month. Before the bell, Moderna reports, with analysts looking for a loss near a dollar ten on about eight ninety million in revenue. Also Vistra, Enbridge, Oklo and TeraWulf, with Humana already out below expectations. After the close, Hawaiian Electric and Constellation Software. Next week, CPI Tuesday, and the bond market is closed Wednesday for Veterans Day.

Grant Calloway

What matters most today: whether the chip bounce survives a ten year yield near five. Tune in Monday for the next brief. Wall Street has long said it takes a strong stomach to buy the dip, and a stronger one to hold it. This podcast is for educational purposes only and is not investment advice.