Stocks Rebound After Selloff As October Hiring Slump Fuels Interest Rate Cut Bets: 10 ETFs To Watch Friday

A hiring freeze in October lifted market expectations for a Federal Reserve interest rate cuts, providing relief to U.S. stocks after Thursday's decline.

The U.S. economy added only 12,000 jobs in October, 211,000 fewer than in September. This marked the lowest monthly pace since December 2020 and sharply missed estimates of 113,000.

Market pricing now reflects a full probability of a 25-basis-point rate cut at next week's Federal Reserve meeting, with the likelihood of another cut in December surging to 85%, according to the CME FedWatch tool.

Hurricanes, Strikes Knock October Employment Down

Beyond the dismal October employment figures, which suggest a recession-like scenario, factors such as hurricanes and strikes have significantly disrupted hiring across the nation.

Hurricane Helene hit Florida's Gulf Coast on Sept. 26, followed by Hurricane Milton on Oct. 9, prompting widespread evacuations and disrupting multiple economic sectors.

"It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates," the Bureau of Labor Statistics (BLS) stated in its report.

Additionally, layoffs surged in manufacturing, rising to 46,000 — the highest since 2009, excluding the pandemic months of March and April 2020. "Manufacturing employment decreased by 46,000 in October, reflecting a decline of 44,000 in transportation equipment manufacturing largely due to strike activity," the BLS added.

Despite stagnant job growth in October, the unemployment rate held steady at 4.1%, indicating that businesses remain committed to retaining their workforce.

Equity ETFs Rise On Rising Rate-Cut Bets

• The SPDR S&P 500 ETF Trust SPY, tracking the S&P 500 index, rebounded 0.7% after Thursday’s 1.9% slump.
• The tech-heavy Invesco QQQ Trust QQQ, replicating the Nasdaq 100, was 0.6% higher.
• Small caps outperformed, with the iShares Russell 2000 ETF IWM soaring 1.2%.
• The Roundhill Magnificent Seven ETF MAGS rose 1.4%. On Thursday, it tumbled 3.9%, marking the sharpest 1-day drop since late July.
• Sector-wise, the Consumer Discretionary Select Sector SPDR Fund XLY led gains, up over 2%, fueled by a 6% post-earnings rally from Amazon.com Inc. AMZN.
• The Direxion Daily AMZN Bull 2X Shares AMZU skyrocketed by 13%.
• Rising expectations for Fed rate cuts fueled gains in real estate industries, with the iShares U.S. Home Construction ETF ITB rising 1.8%.
• Semiconductors rebounded after tumbling by 3.9% on Thursday. The iShares Semiconductor ETF SOXX rose 1.6%. Intel Corp. INTC was among the best performers following better-than-expected results.
• The SPDR Gold Trust GLD – the biggest physically-backed gold ETF – also rose 0.5%, rebounding after Thursday’s 1.6% decline.
• The United States Oil Fund USO, which tracks West Texas Intermediate (WTI) crude performance, gained 1% amid rising geopolitical tensions in the Middle East following Iran’s retaliatory attack on Israel.

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