Midterms and the Jobs Report

Estimated reading time: 8 minutes

After markets got off to a choppy start to October, Wall Street gets a pulse check on how businesses and consumers are feeling about the economic outlook.

At a Glance

• The news: Investors will digest the results of Tuesday’s midterm elections. The government will also release the October employment report Friday.
• The context: A change in the balance of power on Capitol Hill could reshape government spending and tax policy. Democrats are overwhelmingly expected to retake the House and are slight favorites in the Senate.

Tuesday’s midterm elections will get the most eyeballs this week. Voters will determine who fills all 435 seats in the House and one-third of the 100 seats in the Senate in what will likely be a referendum on the president halfway through his term.

The prevailing consensus is that it will be a good night for the Democratic party: Democrats are projected to reclaim the House, and slightly favored to take the Senate, based on prediction markets and state polling.

A change in the balance of power affects the market because Congress has the power of the purse. It generally controls spending and tax policy — impacting everything from income taxes and welfare benefits to funding for defense. 

In theory, investors prefer a divided government because there’s more uncertainty when one party is in power. Political gridlock forces compromise and makes major legislative changes less likely. That makes it easier for businesses to plan for the future. 

Once the elections are called, the spotlight will shift to Friday’s jobs report. The past few months of labor data has been solid — albeit unspectacular — empowering the Fed to be hawkish about raising interest rates.  While the Fed didn’t raise rates last week, traders are pricing in a roughly 75% chance it will raise them at its next meeting in December.   

On the Docket

Monday

• 10:00am ET | October 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 | September Construction Spending: Construction data is a leading indicator of business activity.
• Fedspeak: Chicago Fed President Austan Goolsbee will moderate a Q&A with the Deputy General Manager of the Bank of International Settlements.
• Earnings
  • Mega-Caps: Apple (AAPL), Berkshire Hathaway (BRKB), Palantir Technologies (PLTR)
  • Large & Mid-Caps: Vertex Pharmaceuticals (VRTX), Marriott International (MAR), Williams Companies (WMB), Diamondback Energy (FANG), Realty Income (O), Entergy (ETR), IDEXX Laboratories (IDXX), Estee Lauder Companies (EL), Public Service Enterprise Group (PEG), ON Semiconductor (ON), Fox Class B (FOX), Twenty-First Century Fox Class A (FOXA), Loews (L), SBA Communications (SBAC), Healthpeak Properties (DOC), Clorox (CLX)

Tuesday

• 10:00am ET | September 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.  
• 10:00am ET | September Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.
• 5:00pm ET | October 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.
• Earnings
  • Mega-Caps: Advanced Micro Devices (AMD), Amgen (AMGN), Arista Networks (ANET)
  • Large & Mid-Caps: Pfizer (PFE), Eaton Corp (ETN), Marathon Petroleum (MPC), Booking Holdings (BKNG), Apollo Global Management, Inc (APO), Ametek (AME), Keurig Dr Pepper  (KDP), Waters (WAT), Block, Inc. (XYZ), American International Group (AIG), YUM! Brands (YUM), Sysco (SYY), Prudential Financial (PRU), Archer-Daniels-Midland (ADM), Expeditors International of Washington (EXPD), Fiserv (FISV), International Flavors & Fragrances (IFF), Super Micro Computer  (SMCI), Skyworks Solutions (SWKS), Broadridge Financial Solutions (BR), DuPont de Nemours (DD), Revvity (RVTY), Zebra Technologies (ZBRA), Leidos Holdings (LDOS), Ball (BALL), Assurant (AIZ), Gartner (IT), Pinnacle West Capital (PNW), Jack Henry & Associates (JKHY), Henry Schein (HSIC), Aptiv (APTV), Mosaic (MOS)

Wednesday

• 7:00am ET | Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market. 
• 8:15am ET | October 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 |  US Treasury Quarterly Refunding Announcement: The Treasury Department updates its debt issuance projections, with the release including details on what maturities the government plans to raise funds from. This release is closely watched by fixed income investors. 
• 8:30am ET | September Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity. 
• 9:45am ET | October S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment. 
• 10:00am ET | October ISM Services PMI: This index from the Institute for Supply Management tracks how purchasing managers across different services industries feel about the business environment.
• Earnings
  • Large & Mid-Caps: Qualcomm (QCOM), McDonald’s (MCD), Uber (UBER), CVS Health (CVS), McKesson (MCK), Datadog (DDOG), Emerson Electric Co (EMR), AppLovin (APP), Motorola Solutions  (MSI), WW Grainger (GWW), Allstate (ALL), MetLife (MET), Cencora (COR), Aflac (AFL), Edwards Lifesciences (EW), Vivmark Residential (VMRK), Coherent Corp (COHR), Martin Marietta Materials (MLM), Expedia Group (EXPE), TKO Group Holdings Inc (TKO), Atmos Energy (ATO), Kraft Heinz (KHC), Corpay (CPAY), Eversource Energy (ES), Qnity Electronics (Q), Texas Pacific Land Corp (TPL), STERIS (STE), Amcor PLC (AMCR), PTC (PTC), CDW (CDW), Fidelity National Information Services (FIS), Zimmer Biomet Holdings (ZBH), APA Corp (APA), Charles River Laboratories International (CRL), CF Industries Holdings (CF), Host Hotels & Resorts (HST), News (NWSA), News Corp (NWS), Stanley Black & Decker (SWK), Trimble (TRMB), Fair Isaac (FICO), Albemarle (ALB), AES (AES), Insulet (PODD)

Thursday

• 5:30am ET | October Challenger Job Cuts: The firm Challenger, Gray & Christmas tracks the number of layoff announcements each month by sector. 
• 8:30am ET | Productivity and Unit Labor Costs: These measures provide a breakdown of how productive workers were per hour of work and at what cost. 
• 8:30am ET | Weekly Jobless Claims: This high-frequency labor market data gives insight into initial and continuing filings for unemployment benefits.
• Fedspeak: Cleveland Fed President Beth Hammack will discuss stablecoins and safe haven currencies at a conference hosted by the Swiss National Bank. Richmond Fed President Thomas Barkin will take part in a moderated Q&A hosted by the Richmond and Atlanta Fed banks. Dallas Fed President Lorie Logan will moderate a discussion on AI and its impact on the labor force.
• Earnings
  • Large & Mid-Caps: ConocoPhillips (COP), Parker-Hannifin (PH), Southern Company (SO), Airbnb (ABNB), Duke Energy (DUK), Monster Beverage (MNST), EOG Resources (EOG), Lumentum Holdings (LITE), Cigna (CI), Cummins (CMI), Simon Property Group (SPG), Air Products and Chemicals (APD), Targa Resources (TRGP), Cardinal Health (CAH), Sempra Energy (SRE), Devon Energy (DVN), Becton Dickinson and Company (BDX), Rockwell Automation (ROK), Microchip Technology (MCHP), Consolidated Edison (ED), Live Nation Entertainment (LYV), Kimberly-Clark (KMB), Axon Enterprise (AXON), Iron Mountain (IRM), Mettler-Toledo International (MTD), Zoetis (ZTS), Ameren (AEE), DTE Energy (DTE), Verisk Analytics (VRSK), Ralph Lauren (RL), Tapestry (TPR), Global Payments (GPN), Viatris (VTRS), Evergy (EVRG), Solventum (SOLV), Akamai Technologies (AKAM), Regency Centers (REG), Bio-Techne (TECH), Camden Property Trust (CPT), Wynn Resorts (WYNN)

Friday

• 8:30am ET | October 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 | November University of Michigan Consumer Sentiment: Consumer feelings about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.  
• 3:00pm ET | September Consumer Credit: Borrowing activity gives insight into broader economic activity.
• Fedspeak: New York Fed President John Williams will take part in a moderated discussion hosted by the European Central Bank. St. Louis Fed President Alberto Musalem will speak at an event hosted by the regional Fed bank, followed by moderated Q&A. Fed Vice Chair for Supervision Michelle Bowman will take part in a moderated discussion, followed by Q&A.
• Earnings
  • Large & Mid-Caps: Moderna (MRNA), Humana (HUM), Vistra (VST), EchoStar (ECHO), PPL (PPL), Charter Communications (CHTR), Franklin Resources (BEN)

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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