A Blowout Jobs Report and a Bruised Market

Market Analyst

9 November 2026

Last week we were left with some questions for the market, and now the labour market has answered them emphatically. The payroll in October was 165,000, which is higher than the expected 60,000, unemployment fell to 4.1%, and the revision added back jobs instead of taking them away, as it usually does. This brings back December hike odds to around 75-80%. But the market was already bruised before receiving this news, the S&P500 was having its worst week since April 2025, led by the chip-led AI sell-off, which pulled the S&P 500 down by 4.6%. This week has a clear path. October CPI is the main inflation data before the Fed’s 8-9 December meeting. If the CPI confirms that inflation is still hot, December hike odds will become almost certain, but if it’s cooling down, the odds for December might differ.

Where we’re starting from

There were 4 things that defined last week's market. First is the midterm election. Democrats won both the House and the Senate, which put an end to the unified control of Republican for the final 2 years of Trump’ term from January. While some stocks were rallying, analysts from various institutions flagged that there might be some slowdown in the AI and data centre build-out due to tougher permitting and state-level rules.

The second thing is the AI sell-off on Thursday. The S&P500 fell 4.6% on chip earnings and AI investment concerns, then bounced back a bit on Friday. For the index side, it ended at- 2.7% for the week.

Next is the increase in rates from the Bank of England. BoE has raised the interest rate to 4.0%, which is its first hike in 3 years, and said its next decision depends largely on the Iran conflict.

Lastly, the job reports that come in beyond the 165,000 headlines. August and September jobs reports were revised up by 84,000 combined, and the hourly earnings also rose to 4.0% MoM (3.1% YoY).

Gold price candlestick chart showing a decline from April highs, an August rebound and a recovery towards USD 4,128 per ounce in November.

Theme 1: Does October CPI confirm December hike?

The consensus expects both headline and core CPI to slow down (0.3% on headline and 0.2% on core), which would also end a run of two consecutive upside surprises in core data. There’s one point worth keeping an eye on for this report, the report will not include YoY figures. Because the 2025 October CPI was never published during the government shutdown, the market trades on monthly data alone, since there’s no yearly data for comparison.

Also, Friday’s PPI will add the pipeline view. September’s PPI jumped 1.3%, with energy up 10.8% and petrol up more than 20%. This October PPI is expected to cool to around 0.4%, and if both CPI & PPI reports soften, the Fed will face a genuine dilemma. A strong labour market on the hiking side, while cooling inflation argues for patience.

What would change the story: A Core CPI report at 0.3% or higher, which, combined with 165,000 payrolls, would make December odds close to certain. On the other hand, a core print at 0.1% would be a case for waiting.

Theme 2: Is AI sell-off finding a floor?

Last week, the topic changed from individual companies to the whole sector. Thursday was the S&P500’s worst day since the tariff shock in April 2025, even after strong earnings elsewhere. The result from the midterm also adds a new layer to the market due to tighter permitting and state-level restrictions on data centre construction from a Democratic Congress with new governors in several states.

This week’s earnings test the most exposed part of the trade. First, on Tuesday, CoreWeave, a heavily indebted AI infrastructure company that results go straight to credit concerns. Moreover, Anthropic’s IPO roadshow is another test of how much the market is still willing to pay for AI.

What would change the story: A CoreWeave financing strain signal would show the pressure on AI spenders feeding through to their suppliers and lenders. This would lead a valuation correction into a demand problem, but a solid result would give the market its first real reason to stabilise.

Theme 3: Is the energy shock finally fading?

Oil has been the main reason for upside inflation risk, pushing the headline CPI to 3.7% in September and producer energy prices up more than 10%. But last week, crude fell sharply, which eased pressure on Treasury yields. If that holds, it would be more important than any data coming out.

There’re still 2 reasons for caution. First, security threats to Middle Eastern shipping are still not gone away, and the market also faced several false dawns since June. The second thing is that other central banks are still leaning against energy inflation. The BoE has just increased its rate and tied its next move directly to the Iran conflict. Also, Thursday’s existing home sales are another reminder of the other side of the trade-off due to a high rate that already squeezing housing hard.

What would change the entire story: A renewed spike in oil prices due to Gulf escalation would reverse the relief in yields from last week, which will keep headline inflation elevated into December. This would leave the Fed with a strong jobs report plus hot prices at the same time, which would be the clearest possible case for a hike.

The one thing to watch

Core CPI on Tuesday morning, after a 165,000 jobs report, is the only remaining data point before the meeting minutes, and there are also the November payrolls that can realistically change the December decision. With no YoY data to anchor it, the monthly core data is the whole story.