October jobs report tests bets on a December rate increase

Traders were pricing a more than 65% chance of a Federal Reserve rate increase in December, the CME FedWatch tool showed, Reuters reported Friday morning. The Labor Department releases the October jobs report at 8:30 a.m. Eastern, and Reuters said investors will look to it for clues on interest rates.

The Fed left its benchmark rate in a range of 3.75% to 4% last week and acknowledged that inflation remains elevated, Reuters reported.

A Reuters survey of economists expects 65,000 new jobs in October, after a 29,000 gain in September that a late Labor Day holiday held down. Unemployment is expected to stay at 4.2%. Average hourly earnings are expected to rise 0.3% on the month, after 0.1% in September, and 2.9% on the year. That would be the first annual gain below 3% since May 2021, after 3.0% in September.

Reuters said a slowdown of that kind would reinforce the view that the labor market is not a source of inflation. Economists in the survey still expected a December increase, though some thought milder wage pressure could limit how many increases come next year. That is the open question for a holder of Invesco QQQ Trust, Series 1 QQQ, which tracks the Nasdaq-100.

“That really should help to dampen medium-term price pressures because the biggest cost input for corporate America is labor,” James Knightley of ING told Reuters.

Nasdaq-100 futures were up 1.7% early Friday, S&P 500 futures were up 0.4%, and Dow futures were down 0.9%, CNBC reported just after 7 a.m. Eastern. CNBC said the rebound came as some investors bought chip stocks after Thursday’s drop, and that the jobs report was capping the gains.

CNBC said chipmakers Micron and Nvidia were up 9% and 5% in trading ahead of the open, after Thursday drops of 17% and 9%.

The S&P 500 fell 4.4% on Thursday, to 7,354. The Nasdaq Composite fell 5.5%, to 24,315, and the Dow lost 1,833 points, or 3.4%, to 51,523. CNBC said the Nasdaq Composite closed more than 10% below its most recent high, what Wall Street regards as a correction, and that Thursday was the worst day for all three since April 2025.

The Nasdaq-100 fell 6.4%. QQQ fell 6.5%. BlackRock’s iShares Semiconductor ETF SOXX fell 12.1%.

Reuters said a technology-led rout wiped nearly $3 trillion off the market value of S&P 500 companies, on fears that Democratic control of Congress could mean tougher rules for artificial intelligence. The losses followed the party’s midterm victory earlier this week, including in some states with large data-center industries. A jump in oil prices on Thursday also pressured stocks, Reuters said, over energy-fueled inflation and the prospect of higher interest rates from central banks around the world.

Democrats plan new AI bills when they take control of Congress in January, Reuters reported Friday, but any legislation would face steep odds while President Donald Trump is in the White House. He has dismissed calls for mandatory AI rules.

“We view Thursday’s selloff as reactionary, not a fundamental reset, driven by a collision of concerns around AI spend, policy and inflation,” Jane Gibbons, equity strategist at Jefferies, told Reuters.

On Friday, Japan’s Nikkei 225 fell 6%, to 57,435. South Korea’s Kospi fell more than 8% at the open, and trading was halted for 20 minutes, the Korea Times reported. The Kospi closed down 6%, at 5,060.