Jobs Data, Portfolio Rebalancing

Estimated reading time: 7 minutes

As markets transition to the fourth quarter, we’ll get the last monthly jobs report before the midterm elections.

At a Glance

• The news: The third quarter of 2026 comes to an end with annual revisions to GDP and the September jobs report.
• The context: Friday’s jobs report will be the last big employment update we get before the November midterm elections. The question is whether last month’s job growth was a fluke or the start of a durable trend.
• Move: Brace for portfolio rebalancing. In the third quarter, the S&P 500’s (VOO, IVV) total return was about +3% while U.S. bonds’ (TLT, IUSB) was -2%. In terms of sectors, Energy (XLE, VDE) , Information Technology (XLK, VGT) and Health Care (XLV, VHT) led, while Utilities (XLU, VPU), Industrials (XLI, VIS) and Consumer Discretionary (XLY, VCR) lagged. If you’re a believer in the power of rebalancing and mean reversion, it’s possible these trends reverse in the short-term.

Investors should brace for quarter-end and month-end portfolio rebalancing. Institutional investment managers tend to use these calendar checkpoints to re-evaluate their portfolios. In practice, this often means taking profits on the period’s best-performing assets and reallocating capital to underperformers. While it’s a mechanical process, it’s also  somewhat unpredictable and can trigger volatility that has nothing to do with the underlying fundamentals.

Fundamentals will be relevant to annual revisions to GDP and personal income data, however. The Bureau of Economic Analysis will release those on Wednesday, the last day of September. Incorporating more comprehensive and updated information, the backward-looking data dump provides a detailed read on economic trends. While it’s unlikely to dictate near-term trading action, GDP data sets the tone from which most discussion of the economy flows.

Then the main event comes Friday morning with the release of the September jobs report. Though investors and the Federal Reserve are prioritizing inflation right now, labor data is still an important factor in interest rate policy. 

After August brought better-than-expected growth (the economy added 162,000 jobs versus the consensus forecast of 55,000), there was a sharp rise in Treasury yields and mortgage rates. Any sort of repeat could send yields and interest rates even higher. 

It’s also the last jobs report we’ll get ahead of midterm elections, so the numbers could end up becoming fodder for political campaigns on either side.

On the Docket

Monday

• 10:30am ET | September Dallas Fed Manufacturing Activity: The Dallas Fed surveys manufacturing executives in the region on business conditions and their outlook.

Tuesday

• 9:00am ET | July FHFA House Price Index: This is a broad measure of single-family house prices released by the Federal Housing Finance Agency. 
• 10:00am ET | September Conference Board Consumer Confidence: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on job availability and the state of the labor market. 
• 10:00am ET | August Job Openings: A key measure of business demand for labor is the number of job openings, since reducing openings is easier and preferable to layoffs. 
• 10:30am ET | September Dallas Fed Services Activity: The Dallas Fed surveys executives in the region’s services industry on business conditions and their outlook.
• Fedspeak: Chicago Fed President Austan Goolsbee will take part in a moderated Q&A at an Illinois Manufacturers’ Association event. New York Fed President John Williams will give a speech at a University of Buffalo event, followed by Q&A.
• Earnings
  • Large & Mid-Caps: Carnival (CCL)

Wednesday

• 7:00am ET | Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market. 
• 8:15am ET | September ADP Monthly Employment Report: This survey, usually released a day or two before the official government jobs report, offers insight into private sector employment trends. 
• 8:30am ET | August Retail Inventories: Wholesalers and retailers often operate as intermediaries for the sale of manufactured products, serving as a key part of the goods supply chain.  
• 8:30am ET | August Personal Income and Spending: Consumer spending accounts for about two-thirds of economic growth in the U.S.. 
• 8:30am ET | August Personal Consumption Expenditures Price Index: The Fed says this inflation metric is the best measure of price changes.  
• 8:30am ET | GDP Third Estimate: The primary measure of economic activity, Gross Domestic Product (GDP) is measured as total expenditure on U.S. goods and services.  
• 8:30am ET | August Wholesale Inventories: Wholesalers and retailers often operate as intermediaries for the sale of manufactured products, serving as a key part of the goods supply chain. 
• 9:45am ET | September Chicago Business Barometer: The barometer provides information on U.S. economic activity and business conditions, consisting of seven activity indicators and three buying policy indicators.
• Fedspeak: Richmond Fed President Thomas Barkin will give welcome remarks at a conference titled Investing in Rural America, hosted by the regional bank. Fed Governor Lisa Cook will give afternoon remarks at the Richmond Fed conference. Goolsbee will deliver a keynote address at an event titled Why Consumers and Economists See Different Economies. Minneapolis Fed President Neel Kashkari will participate in a fireside chat hosted by the Council on Foreign Relations, followed by Q&A.
• Earnings
  • Mega-Caps: Micron Technology (MU)
  • Large & Mid-Caps: Jabil (JBL), FactSet Research Systems (FDS)

Thursday

• 5:30am ET | September Challenger Job Cuts: The firm Challenger, Gray & Christmas tracks the number of layoff announcements each month by sector. 
• 8:30am ET | Weekly Jobless Claims: This high-frequency labor market data gives insight into initial and continuing filings for unemployment benefits. 
• 10:00am ET | September ISM Manufacturing PMI: This index from the Institute for Supply Management tracks how purchasing managers across the manufacturing sector feel about the business environment. 
• 10:00am ET | August Construction Spending: Construction data is a leading indicator of business activity.
• 5:00pm ET | September Total Vehicle Sales: Cars are a big ticket item for consumers, so underlying vehicle sales trends can help shine a light on demand for durable goods. 
• Fedspeak: Barkin will participate in a panel discussion with Boston Fed President Susan Collins and Kansas City Fed President Jeff Schmid about regional trends, workforce dynamics and rural economic conditions, followed by Q&A. New York Fed President John Williams will moderate a discussion with Cook at a panel hosted by the regional bank. Dallas Fed President will participate in moderated Q&A at an appreciation event for the regional bank’s district.
• Earnings
  • Large & Mid-Caps: Accenture (ACN), Nike (NKE), McCormick & Company (MKC)

Friday

• 8:30am ET | September Employment Situation Summary: This monthly blockbuster release from the Labor Department gives a comprehensive look at employment, wages, and hours worked in the previous month.
•  10:00am ET | August Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.

Note: Companies with at least $200 billion in market capitalization are classified as “Mega-Caps,” while others are shown in the “Large & Mid-Caps” sections.

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