(Bloomberg) — Volatility lashed Wall Street, with strong evidence of a cooling labor market pushing high-valuation tech stocks and crypto to big losses while bonds rallied on bets the Federal Reserve will cut rates.
Equities sold off for the second time in three days and 10-year yields tumbled the most in a month following Challenger, Gray & Christmas Inc. data showing the largest October job cuts in more than 20 years. The Nasdaq 100 slumped almost 2%, and a closely watched volatility index briefly hit 20.
Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.
While bets on Fed cuts have powered the bull market in equities alongside the artificial-intelligence boom, concerns over lofty valuations have surfaced. Technical indicators are flagging reasons for caution while worries about an narrowing cohort of stocks driving gains have become louder.
If anything, the slide in equities appears to be taking some of the “froth” out of the market, said Chris Murphy at Susquehanna International Group LLP.
Traders are also keeping a close eye on a slew of policymakers slated to speak on Thursday.
Fed Bank of Chicago President Austan Goolsbee told CNBC that a lack of inflation data during the shutdown makes him more uneasy about continuing rate cuts. His New York counterpart John Williams said model estimates of the US neutral rate are lower than bond-market estimates, which he cautioned are unreliable.
The S&P 500 fell 1.2%. Tesla Inc. led losses in megacaps. Qualcomm Inc. became the latest chipmaker to deliver an upbeat forecast and still leave investors underwhelmed. Bitcoin lost 2.5%.
The yield on 10-year Treasuries slid eight basis points to 4.08%. Money markets are now implying an about 60% chance of a quarter-point rate reduction next month. A dollar gauge fell 0.2%.
With the scarcity of data caused by the US government shutdown, investors have turned to private figures for the latest readings on the economy.
Companies announced 153,074 job cuts last month, almost triple the number during the same month last year and driven by the technology and warehousing sectors. It’s the most for any October since 2003, when the advent of cellphones was similarly disruptive, said Andy Challenger, the company’s chief revenue officer.
“We are sticking to our view that the Fed will deliver a follow-up 25 basis-point cut in December because restrictive Fed policy can worsen the already fragile employment backdrop,” said Elias Haddad at Brown Brothers Harriman & Co.
Meantime, Revelio Labs data showed the US lost 9,100 nonfarm jobs in October after gaining 33,000 the month prior.
“If anything, the data reinforces the difficulty in making a case that hiring is re-accelerating,” said Vail Hartman at BMO Capital Markets. “When combined with this morning’s Challenger data, we remain skeptical of the argument that the labor market is staging a re-acceleration into year-end.”
Don Rissmiller at Strategas says the US labor market is not collapsing, but it does not look robust to shocks either.
“While some FOMC members have been hesitant to commit to another fed funds rate cut at their December meeting, a wobbling labor market would likely force their hand,” he noted.
The US central bank lowered rates in October as a way to bolster the weakening labor market. But inflation, which at 3% in September remained well above the Fed’s 2% target, has also raised concerns among some officials that it will take longer to come down than they thought.
Fed Chair Jerome Powell last month counseled against trying to predict whether another reduction was likely in 2025.
Despite his cautious rhetoric at the October policy meeting, Ulrike Hoffmann-Burchardi at UBS Global Wealth Management bets the US central bank will cut rates twice more by early 2026.
“Evidence of a cooling labor market will continue to mount, and recent inflation readings have not been sufficient to shift the Fed’s focus away from the weakening demand for workers,” she said. “Further rate cuts should lead to a decline in Treasury yields.”
Hoffmann-Burchardi says quality fixed-income offers an appealing combination of income and the potential to perform well in the event of slowing economic activity and further rate cuts. Income-based investors can also consider equity income or yield-generating structured strategies to improve cash returns, she noted.
Wells Fargo & Co. expects blue-chip companies — particularly large technology firms funding massive artificial intelligence investments — to borrow more from the US bond market next year, taking advantage of favorable financing conditions.
Corporate Highlights:
Microsoft Corp. is pursuing a more powerful form of AI called “superintelligence” it hopes will be capable of making advances in areas like medicine and materials science. DoorDash Inc., the US food-delivery app leader, said it will spend more on investments next year to build new products and bolster internal tools, weighing on its earnings forecast. Peloton Interactive Inc. issued a voluntary recall on about 877,800 units of its high-end Bike+ model in the US and Canada following reports that some seat posts broke, causing riders to fall off. Boeing Co. will avoid a criminal charge over two fatal 737 Max crashes after a federal judge paved the way for a $1.1 billion settlement agreement, handing the embattled manufacturer a victory in a long-running legal battle. Uber Technologies Inc. is in talks on a potential deal with Getir that would help the US company further expand its delivery operations in Turkey, according to people with knowledge of the matter. Lyft Inc. projected an acceleration in bookings this quarter, easing concerns about the ridehailing company’s efforts to expand globally and maintain customer loyalty. Lucid Group Inc. posted a worse-than-expected third-quarter loss as it grapples with sluggish production of its Gravity SUV and a challenging trade environment. Walt Disney Co. signed a new multiyear deal to make DraftKings Inc. the official betting site and odds provider for its ESPN sports networks, replacing a venture it had with casino operator Penn Entertainment Inc. Warner Bros. Discovery Inc., the parent of HBO and CNN, reported third-quarter revenue that missed analysts’ expectations, providing a glimpse into the company’s businesses as it puts itself up for sale. SoftBank Group Corp. explored a potential takeover of US chipmaker Marvell Technology Inc. earlier this year, people familiar with the matter said, in what would have been the semiconductor industry’s largest-ever deal. Texas officials have asked a state court judge to temporarily block Kenvue Inc. from marketing Tylenol as safe for pregnant women, and from issuing a dividend, escalating the company’s legal woes just days after announcing a major merger with Kimberly-Clark Corp. Eli Lilly & Co. and Novo Nordisk A/S secured deals with the Trump administration to slash prices for their blockbuster weight-loss drugs in exchange for tariff relief and wider access for Medicare patients. Novo Nordisk has again increased its offer for Metsera Inc., people familiar with the matter said, as its takeover battle with Pfizer Inc. for the obesity startup escalates. Moderna Inc. posted a narrower third-quarter loss than Wall Street expected, a sign that its cost-cutting measures are helping offset the decline of its Covid business. ConocoPhillips raised its total spending plans for the Willow oil and natural gas project in Alaska to as much as $9 billion, citing inflation and other rising costs. Under Armour Inc. said sales might fall as much as 5% this fiscal year, a bigger decline than Wall Street estimated and raising concern that the sportswear company’s turnaround effort isn’t making enough progress. Krispy Kreme Inc. reported positive cash from operations in the third quarter for the first time in three quarters — and its highest since late 2022 — as the doughnut maker progressed with its turnaround plan following the end of its US McDonald’s partnership in June. EchoStar Corp. reported a $16.5 billion impairment charge and agreed to sell more spectrum licenses to Elon Musk’s SpaceX for $2.6 billion as it works to unwind parts of its 5G wireless network. Celsius Holdings Inc. sank on concern near-term sales might be disrupted by a distribution channel change involving its newly acquired Alani Nu brand. Aquarian Holdings agreed to buy insurer and annuity provider Brighthouse Financial Inc. for $4.1 billion in cash. Snap Inc. surged after the company announced a $400 million partnership with Perplexity AI Inc. to incorporate its AI-powered search engine into Snapchat. Charles Schwab Corp. agreed to buy Forge Global Holdings Inc., a marketplace for buying and selling shares of private companies, for about $660 million. CarMax Inc. sank after terminating its chief executive over lagging sales and a nosedive of the stock that halved the used-car retailer’s market value so far this year. Tapestry Inc. raised its full-year outlook and reported quarterly earnings that beat expectations on the strength of its Coach brand — but the shares slumped, suggesting investors were looking for more. United Parks & Resorts Inc.’s third-quarter revenue missed estimates, as weather disruptions and softer discretionary spending weighed on attendance. Deutsche Boerse AG and Nasdaq Inc. risk hefty European Union fines after the bloc’s antitrust watchdog opened a full-scale investigation into a suspected cartel linked to listing, trading and clearing of derivatives. Canadian jet manufacturer Bombardier Inc. is considering mergers and acquisitions in the defense sector, seeking to capitalize on governments’ plans to spend heavily to rearm their militaries. Commerzbank AG plans to sell significant risk transfers worth €5 billion ($5.8 billion) in the fourth quarter as the German lender seeks to free up capital. HelloFresh SE shares pared most of their losses following a steep drop when short seller Grizzly Research LLC published a report that questioned its management and business model. The German subscription meals firm rejected the criticism. Renault SA presented its new battery-powered Twingo city car as Europe’s automakers try to offer more affordable electric vehicles to fight back against Chinese rivals. Air France-KLM reported earnings that missed expectations, hurt by strikes and higher taxes. Worldline SA Chief Executive Officer Pierre-Antoine Vacheron said a turnaround plan unveiled Thursday aims to permanently address deficiencies at the embattled payments provider following a €500 million capital raise. AstraZeneca Plc’s profit rose more than analysts anticipated last quarter, buoyed by demand for its blockbuster cancer and diabetes drugs. Diageo Plc lowered its full-year outlook for sales and profit as weak demand in China and the US weigh on the British distiller. A.P. Moller-Maersk A/S shares fell with investor disappointment over a smaller-than-expected improvement in the container-shipping giant’s full-year profit guidance. Volvo Car AB is seeking a long-term operating return of 8%, helped by new electric models like the EX60 sport utility vehicle and deeper ties with parent Geely. Nissan Motor Co. promised to build on a better second quarter despite longer-term forecasts signaling persistent challenges for the carmaker’s efforts to turn around its worst financial crisis in decades. What Bloomberg strategists say…
“With the US government shutdown now the longest in history, and official economic indicators delayed as a result, private information on jobs is gaining in importance. And with the Fed focused on weakness in the labor market, the bond markets are uber-sensitive to the data.”
—Alyce Andres, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 1.2% as of 12:15 p.m. New York time The Nasdaq 100 fell 1.9% The Dow Jones Industrial Average fell 1% The MSCI World Index fell 0.8% Bloomberg Magnificent 7 Total Return Index fell 2.1% The Russell 2000 Index fell 1.7% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.4% to $1.1540 The British pound rose 0.5% to $1.3113 The Japanese yen rose 0.8% to 152.86 per dollar Cryptocurrencies
Bitcoin fell 2.6% to $100,952.54 Ether fell 4.6% to $3,282.58 Bonds
The yield on 10-year Treasuries declined eight basis points to 4.08% Germany’s 10-year yield declined two basis points to 2.65% Britain’s 10-year yield declined three basis points to 4.43% The yield on 2-year Treasuries declined eight basis points to 3.55% The yield on 30-year Treasuries declined six basis points to 4.68% Commodities
West Texas Intermediate crude fell 1% to $59 a barrel Spot gold was little changed –With assistance from Denitsa Tsekova.
©2025 Bloomberg L.P.