The October jobs report came in far stronger than expected. Nonfarm payrolls added 165,000 jobs, well above the roughly 65,000 forecast. The unemployment rate fell from 4.2% to 4.1%.
Revisions added about 84,000 more jobs. August was raised by 53,000 to 186,000. September was revised up 31,000 to about 60,000.
Average hourly earnings beat forecasts. Month over month, pay rose 4%. Year over year it came in at 3.1%, above the 2.9% expected.
These numbers helped lift stocks and start a rebound, though it is unclear if the gains will hold through the day. The report adds some fuel to the bull market move.
Consumer sentiment
Consumer sentiment also beat forecasts. The preliminary number was 51, versus just under 48 expected. Current conditions hit 51, above October's 46.7. Consumer expectations rose to 50.9 from 48.8 in October.
One-year inflation expectations fell from 4.7% to 4.3%. The five-year reading was about 3.4%.
These sentiment numbers have been skewed by politics. Last month the S&P 500 was at record highs while these readings were falling, which points to political bias in the data. I treat consumer sentiment as a fourth-tier number now because politics has crept into it.
The year-ahead inflation expectation, while down, stays well above normal levels. The 3.4% to 4% range matches what was seen in February before the Iran war began. Given worries about affordability going into the election, the improvement is encouraging. Some consumer comments showed anxiety about a possible AI bubble.
The chip selloff and the rebound
The selloff was not surprising given the moves. The Philadelphia semiconductor index fell 12.25% in the prior session. Chip names have pulled back from recent all-time highs, with losses of 30%, 40%, and 50%. Asia saw heavy selling overnight.
Look at the longer view. Widen the Nasdaq, the DRAM ETF that covers many memory chip names, or the Philly semiconductor index out to one or two years and the picture changes. An elevator up can be an elevator down.
Much of the worry in tech comes from the idea that the AI data center buildout will hit headwinds. Regulations are coming that will slow the pace. Some locations will push back on data centers being placed in their neighborhoods. Still, existing and already-approved projects remain under contract, which gives a one-to-three-year window with no slowdown in the build pace.
Stocks are forward looking. If the buildout gets stunted going into 2029 and 2030, that is where the real concerns sit.
Watch today's price action. A parabolic pullback like the prior day's usually takes a day or two to flush out. The key question is whether to stay long into the weekend, when more headline news could hit markets. Stay balanced and careful, because volatility is still high. The VIX sits at 24.
