Below are the economic and market highlights for the week:
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Amid the continuing federal government shutdown, investors continued to lean on private sector reports for a snapshot of the labor market. The ADP October Survey of Private Payrolls showed companies added 42K new hires, topping the Dow Jones estimate of a 22K gain. That reverses September’s decline of 29K. October marked the first month private employers added jobs since July. The report showed job creation was concentrated in companies employing 250 or more workers. Those sized companies added 76K jobs while smaller companies shed 34K. Despite weak job growth, salaries continued to climb, up 4.50% year-over-year. Meanwhile, outplacement firm Challenger, Gray & Christmas released layoff data. It announced October job cuts totaled 153,074, an 183% surge from September and 175% higher than the same month a year ago. It was the highest level for any October since 2003. The highest level of layoffs came from companies in the tech sector which reported 33,281 job cuts.
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The U.S. Services sector accelerated at its fastest pace since February. The ISM Services Index climbed to 52.4 in October, up from 50 the prior month. Readings above 50 signal expansion while those below indicate contraction. Business activity and demand drove the headline reading higher. The business activity index climbed to 54.3, up 4.4 points in September while new orders surged to 56.2, up 5.8 points. In an unwelcome sign for inflation-weary consumers, the prices paid index rose to 70, its highest level since October 2022.
- U.S. manufacturing contracted for the eighth consecutive month, with the ISM Manufacturing Index slipping to 48.7, down 0.4 points from September’s 49.1. A drop in production more than offset a rise in new orders. There was, however, some good news for consumers on the goods front as pricing pressures softened. The prices paid index retreated to 58 from 61.9 in the prior month.
Stocks Sink on AI and Job Jitters
It was a rough start to November trading for the major indices as cracks continued to emerge in the AI trade and private labor market reports sparked job jitters. All major indices ended in the red for the week. However, the tech heavy Nasdaq Composite Index took the brunt of the selloff, dropping more than -3.04% amid on-going concerns around eye-watering AI valuations following their spring and summer rally. Thursday’s session saw a rise in bearish sentiment after outplacement firm Challenger, Gray, & Christmas reported a sharp increase in layoffs, signaling additional weakness in the labor market. However, by the close of trading, markets had trimmed some of their losses. Investors appeared to take into account the high volatility of Challenger’s monthly data and the fact that a sustained uptick in layoffs has yet to be reflected in state-level weekly jobless claims, which continue to be reported despite the ongoing government shutdown at the federal level. Friday’s weak consumer sentiment reading added fuel to the market selloff, nearing its lowest level ever as worries build over the government closure. Speaking of the shutdown, non-essential government offices remain closed for their 38th day on Friday – the longest closure in U.S. history.
Sentiment shifted sharply this week following a strong October. Despite the recent volatility, AI bulls remained upbeat on the sector, noting we remain in the early stages of an AI-led super cycle. However, the trade has become quite crowded and expensive with significant capital expenditures earmarked for several years ahead. The huge CAPEX spending will push profit recognition well into the future, and while there are notable differences in this market and the Dotcom era, many are beginning to question whether the magnitude and concentration in investment could result in overcapacity the way it did previously. Excluding AI-related CAPEX, the U.S.’s Q3 2025 GDP growth would have been nearly zero. Investors have also noticed market breadth remains weak. In October, more stocks in the S&P 500 fell than rose even as the index pushed to new market highs. Market attention is also beginning to shift towards the prolonged government shutdown, which, until now, has had limited impact beyond federal workers. That may soon change. Air traffic is expected to slow dramatically as early as this weekend, with staffing shortages prompting a 10% reduction in flights across 40 major airports. This disruption will not only affect near-term travel but could have passengers up in arms if the closure lingers into the busy holiday travel season. Moreover, airfreight deliveries are likely to be delayed at the height of the shipping season, potentially dampening holiday sales. The broader supply chain may also feel the strain, with just-in-time components for automotive, semiconductors, medical devices, pharmaceuticals, aerospace and defense materials, and energy equipment facing delays. The ripple effects could tip the non-AI portion of the economy over the edge at a time when it is already decelerating. In short, the pressure is mounting—and investors are beginning to demand that Congress strike a deal.
The Week Ahead
Key reports include CPI, PPI, and retail sales.
Oh, The Horror!
With flight cancellations and delays already disrupting travel plans nationwide, millions of travelers are still planning to (hopefully) take to the skies for the upcoming Thanksgiving holiday. There is good news for those who worry about getting sick every time they step on a plane. To stay healthy throughout the journey, travelers can follow the protocols used by Team USA’s Olympic athletes. Olympic champions and hopefuls travel extensively for pre-Olympic, qualifying competitions leading up to the 2026 Winter Games in Italy in February and then will travel to Europe prior to competition. Staying healthy is essential to achieving peak performance. These athletes follow the advice of Dr. Jonathan Finnoff, the Chief Medical Officer (CMO) of the U.S. Olympic & Paralympic Committee (USOPC).
Finnoff has done a deep dive into the best way to avoid illness-causing germs on flights. He has spent much of his career keeping athletes in top performance shape. He was the head team physician for the U.S. Nordic combined team (“combined” includes both ski jumping and cross-country skiing), and attended both the Sochi and Pyeongchang Winter Games in that role. Finnoff currently oversees a team of approximately 60 people, including an in-house research and data science unit, an International Olympic Committee-recognized organization called the U.S. Coalition for the Prevention of Injury and Illness in Sport, and a functional area known as Athlete Health Care, which provides about 1,400 high-level competitors with health insurance. He also manages the USOPC’s Medical Network, leads the USOPC’s three medical clinics, and serves as the chief medical officer (CMO) for the Team USA delegation at the Olympic and Paralympic Games. During the Games, Finnoff oversees 150 to 200 medical providers at the Olympics.
His first day as CMO for Team USA was March 2, 2020, just as the Covid-19 pandemic was shifting into high gear. He spent a lot of time – along with much of the world – exploring data about what helps prevent communicable diseases. Finnoff makes several recommendations for athletes who want to avoid jeopardizing their once-in-a-lifetime chance with a sudden illness. These are tips that the average plane passenger can also use.
Choose Carefully
For air travel, he recommends athletes choose window seats in the middle of the plane which are farthest away from the most heavily trafficked areas of the plane. Stay away from the front – sorry first class passengers – and stay away from lavatories and the rear of the plane.
Wipe Down Surfaces
Finnoff advises athletes to use sanitizing wipes to clean any areas that may be touched, such as their seat tray table, the arm rests, the seat belt, the air nozzle, and even the bathroom door. Pro tip: research shows the tray table has more germs than a toilet seat. Ewe.
Use the Air Nozzle
And, finally, to create a further barrier for germs, Finnoff suggests directing the air nozzle between your seat and the person sitting next to you.
Under Finnoff’s leadership, infections among Team USA athletes plummeted during the pandemic. Not only Covid cases, but skin, respiratory, and gastrointestinal illnesses also declined. Finnoff explained in an interview that it’s because the diligent measures that prevented the spread of Covid—hand-washing, social-distancing, and mask-wearing—also prevented transmission of most other ailments.
Sleep Well
There is one not-so-secret trick that Finnoff says applies to everyone, all of the time. He explained that few things do more for our immune systems than getting seven to eight hours of restful sleep per night.
We wish everyone restful, healthy, and happy holiday season, and safe travels wherever you may go.