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Weekly Update 11/06/2026: Corporate Earnings Remain Robust as Employers Add 165,000 Jobs in October

Insights
  • Apple beats profit and revenue expectations on strong sales growth across all product lines 
  • Revvity stock jumps earnings expectations 
  • DuPont stock gets a lift as they beat profit and revenue expectations and raises fiscal year guidance 
  • Pfizer beats profit and revenue expectations and raises fiscal year guidance 
  • Sysco stock declines on slight revenue miss while reporting in-line profits 
  • Amgen beats profit and revenue expectations and boosts guidance for the third time this year on strong drug sales 
  • Qnity beats profit and revenue expectations and raises forward guidance on strong demand for semiconductors 
  • McKesson blows past profit expectations while exceeding analysts’ revenue estimates and raises full year guidance on strong sales growth in oncology
  • Rheinmetall earnings disappoint on guidance cut

Domestic Economic News

US job growth surged in October and the unemployment rate edged lower, a sign of labor-market strength in an expanding economy. Nonfarm payrolls increased 165,000 last month, topping all forecasts, after an upward revision to the prior two months, according to Bureau of Labor Statistics data out Friday. The unemployment rate fell to 4.1%. Employers across a broad range of sectors added jobs, led by professional and business services and healthcare. Private-sector payroll growth was the strongest since March. Resilient consumer spending and strong business investment have supported demand and boosted corporate profits this year, encouraging companies to add more workers. Job growth has been uneven from month to month, but overall hiring has been strong enough to keep the unemployment rate low. Federal Reserve officials will see one more jobs report and a full slate of inflation data before their next meeting in December. Investors expect them to raise interest rates at that gathering to counter inflation, following an increase in September and a subsequent decision to leave rates unchanged in October. Fed Chairman Kevin Warsh last week described employment conditions as “quite positive,” allowing the central bank to focus on inflation. The yield on 2-year Treasury notes rose and S&P 500 futures remained higher following the release. Healthcare and social assistance employers added about 55,000 workers to payrolls in October, the most in six months. That sector has been the biggest driver of job growth in recent years. The report also suggested the labor market is generating little wage pressure. Average hourly earnings advanced 0.4% from September and 3.1% from a year earlier, matching the slowest pace since 2021. The wage figures highlight a key source of voter frustration in this week’s midterm elections. While the unemployment rate has been low, pay hasn’t kept up with inflation throughout most of 2026. The participation rate — the share of the population that is working or actively looking for work — edged up to 61.9% in October, the highest since March. A broad measure of unemployment also rose as the ranks of those working part-time for economic reasons jumped to a six-month high. Measures of long-term unemployment worsened, with the median duration of a jobless spell reaching 11.9 weeks, the longest since 2021. Labor-market turnover has been historically low for much of the last few years, which has made it difficult to find new jobs and led many to feel either locked out or stuck in place.

With about 60% of S&P 500 members and market capitalization reported, earnings growth stands at 31% vs. a 24.5% preseason forecast. Every sector has exceeded expectations, led by energy, technology and materials, with year-over-year growth of 148%, 68% and 28.6%, respectively, compared with preseason estimates of 125.5%, 65.7% and 26.7%. Top-line growth has remained robust, with every sector expanding from a year earlier and aggregate revenue rising at a double-digit pace for a third consecutive quarter. Sales growth is now 13.5%,exceeding the preseason forecast by 132 bps. Growth stands at 12.1% excluding energy and 8.5% excluding both energy and the AI basket. Five sectors are expected to post double-digit revenue growth, led by technology at 41.8%. With roughly two-thirds of the sector's constituents still to report, technology's sales growth has accelerated for seven consecutive quarters and is tracking at its highest level since at least 2009. Across the broader index, 61.2% of companies have beaten revenue estimates, slightly below the post-Covid average of 62.4%, while 19.7% have missed, compared with the historical average of 22%. Net income and operating margins remain at record levels this quarter. The net income margin rose 8bps from the prior week to 16.04%, exceeding 16% for the first time and expanding 184 bps from a year earlier. The operating margin declined 32 bps from last week, likely reflecting higher costs in commodity-linked sectors, but remained at a record 19.27%, up 328 bps year over year. The expansion suggests companies are converting revenue growth into higher profitability, with additional support from IEEPA-related tariff refunds. Every sector reported a net income margin that met or exceeded preseason expectations. Energy, materials, utilities and communication services fell short of operating-margin forecasts, though the commodity-linked sectors still delivered substantial year-over-year margin expansion alongside technology. Consumer staples was the only sector in which both net income and operating margins declined from the prior year. 

US manufacturing activity picked up in October, supported by the strongest production growth in nearly five years. The Institute for Supply Management's manufacturing index rose one point to 55.5 in October, the second-highest reading in more than four years. The measure topped all but one forecast in a Bloomberg survey of economists. Figures above 50 indicate expansion. The production gauge notched its best reading since late 2021, data out Monday showed. A measure of new orders, a sign of demand, was the highest since July and remained well within expansionary territory. ISM's manufacturing gauge has now pointed to growth for 10 consecutive months, reversing a roughly three-year slump for the sector. The sustained pickup has encouraged manufacturers to hire more workers. Factory headcount increased in October for a fourth month, the longest such stretch since early 2022. Factories are benefitting from strong economic growth, resilient consumer demand and solid business investment. The US economy expanded in the third quarter at the fastest pace in a year, bolstered by business outlays on data centers and artificial intelligence, as well as industrial and other equipment. Manufacturers in recent years have also had to contend with high inflation and supply-chain disruptions amid tariffs and the Iran war. The Federal Reserve's preferred measure of inflation rose 3.6% from a year earlier in September, well above the central bank's 2% goal. ISM's report showed that factories in October once again faced elevated prices for raw materials and longer lead times on supplier deliveries. ISM's prices gauge fell to 75.2, down from the prior month but still higher than before the Middle East conflict began.

US job openings unexpectedly jumped in September to a four-month high and layoffs fell to the lowest level in over a year, signaling firmer demand for workers heading into the fourth quarter. Available positions rose 333,000 to 7.52 million from a revised 7.19 million in August, according to Bureau of Labor Statistics data out Tuesday. That topped all estimates in a Bloomberg survey of economists. The report also showed layoffs slumped to the lowest level since March 2025 and quits rose. The so-called quits rate, which measures the percentage of people voluntarily leaving their jobs each month, climbed to 2.1% — the highest in over a year. The increase in job openings and hiring is welcome news, but such a pickup would need to be sustained over several months to signal the labor market is shifting into a higher gear. For more than a year, many employers have been reluctant to either add workers or cut staff amid high prices and geopolitical uncertainty. But with economic growth accelerating and consumers still spending, companies may be gaining confidence to expand their payrolls. The increase in vacancies reflected more postings in industries like professional and business services, state and local government, manufacturing, trade and transportation as well as construction. Hiring picked up, driven by accommodation and food services. That industry saw a lot of churn in the month as a wave of workers also quit their roles. There were about 1.1 vacancies per unemployed worker in September, which is generally consistent with a balanced labor market. Federal Reserve officials watch this ratio closely as a proxy for the balance between labor demand and supply. At its peak in 2022, the ratio was 2 to 1. Continued labor-market resilience has given Fed policymakers room to focus on persistent inflation. The central bank left interest rates unchanged last week after raising them in September for the first time in three years, giving officials more time to assess inflation and the economy. Fed officials said job gains had kept pace with the workforce and unemployment had changed little, while upgrading their assessment of economic activity to strong. The economy and affordability have been key areas of concern for voters heading into this week’s midterm elections. 

The US trade deficit narrowed slightly in September as the value of goods exports rose to a four-month high. The gap in goods and services trade shrank 0.7% from the prior month to $105 billion, Commerce Department data showed Wednesday. Economists projected a $107.9 billion shortfall, based on the median estimate in a Bloomberg survey. The monthly trade figures, which are not adjusted for inflation, have gyrated through US tariffs, a war-driven jump in oil prices, supply-chain disruptions and surging demand for computers, semiconductors and other components needed to build more data centers. The value of exports rose 1.9%, led by an increase in outbound shipments of capital goods. Imports increased 1.2%, also led by a surge in business equipment. The value of inbound capital goods — a category that includes computers and accessories, semiconductors and telecommunications equipment — rose $11.6 billion from a month earlier to a fresh record. US companies are spending heavily on imported technology to ramp up artificial intelligence capacity. At the same time, imports of industrial supplies, which include oil and petroleum products, fell $3.7 billion from a month earlier. The US imported fewer barrels of crude oil than a month earlier, according to the report. Exports of industrial supplies decreased $1 billion. Imports and exports of nonmonetary gold, a category that has been volatile recently, also declined. On an inflation-adjusted basis, the overall merchandise-trade deficit widened to $119.5 billion in September, the largest since March 2025.

US companies added more jobs in October than expected, an early sign of momentum in a broadly stable labor market. Private-sector payrolls rose by 86,000 for a second month, posting the strongest back-to-back gains since June, according to ADP Research data out Wednesday. The median estimate in a Bloomberg survey of economists called for a 67,000 increase. The advance reflected gains in trade, transportation and utilities, education and health services, leisure and hospitality, financial activities and construction. Payrolls increased across businesses of all sizes. Robust consumer spending and strong economic growth have underpinned the resilience of the labor market, enabling some firms to expand their workforces despite lingering cost pressures. Consistent hiring can help keep unemployment low and allow the Federal Reserve to stay focused on fighting inflation. “Employers of all sizes were hiring last month, and our data suggests that job-changers were lured by a combination of bonuses, overtime, and more hours in addition to higher base pay,” Nela Richardson, chief economist at ADP and a contributor to Bloomberg Television, said in a statement. The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed workers who changed jobs saw a 7.6% increase in their gross pay from a year earlier — the most since 2024. Wage growth for those who stayed put was 4.4%, as seen in the prior month. Base pay growth, however, was little changed from September. ADP bases its findings on payroll data covering more than 26 million US private-sector employees.

In other labor market related news, US labor productivity accelerated in the third quarter at the fastest pace in a year, suggesting a capital spending boom is translating into greater efficiency at a time when input costs have soared. Productivity, or nonfarm business output per hour, increased at a 3.6% annualized rate after an upwardly revised 2.1% pace in the prior quarter, data from the Bureau of Labor Statistics showed Thursday. Unit labor costs — what businesses pay employees to produce one unit of output — fell 0.7%, the first decline since the second quarter of 2025. Labor costs are the biggest expense for many businesses, so companies invest in new technology and equipment to allow their workers to become more efficient. Productivity growth can help firms limit price hikes for consumers and other businesses. Companies have poured massive amounts of money into artificial intelligence, software and equipment — investment that businesses anticipate will allow them to generate more output with the same amount of labor. Weekly jobless claims fell 6,000 to 189,000 in the week ended Oct. 31 compared with the median estimate for 196,000, Labor Department data showed Thursday. It has been a long time since we have seen a figure come in below the 190,000 mark. That was very good news this week as weekly claims tend to be a strong forward-looking indicator. The four week moving average came in at 194,750 while continuing claims rose 23,000 to 1.718 million in the week ending Oct. 24.

US economic growth accelerated in the third quarter amid vibrant business investment and resilient consumer spending. Economists generally expect efficiency gains to continue this year amid the AI rush. After their October meeting, Federal Reserve officials described productivity growth as “strong” even as inflation remained elevated. Chairman Kevin Warsh has said technological advances should ultimately ease price pressures, while cautioning that any AI-driven productivity payoff will gradually emerge. The productivity report showed third-quarter nonfarm business output, which excludes the impact of government spending, increased an annualized 3.7% — the fastest pace in a year. Hours worked rose 0.1%, while hourly compensation, unadjusted for inflation, increased an annualized 2.9%. After adjusting for inflation, worker compensation rose 1.1%. The labor share of income, the portion of output that goes to workers in the form of compensation, was 53% in the third quarter of 2026, the lowest level in data back to 1947. Separate figures out Thursday from Challenger, Gray & Christmas showed layoff announcements were the lowest for any October in three years. So this was further good news on the labor market front this week!

Interest Rate Insight and the Fed

US Treasuries rallied after Democrats swept to power in Congress, pointing to a political environment that may constrain the Trump administration’s tax and spending plans, while the Treasury signaled it may be open to cuts in longer-dated debt issuance. Treasuries rallied across the curve with 10-year yields falling three basis points to 4.925% in early trading Wednesday after the election results, while the dollar sank the most in two months. Thirty-year yields dropped about two basis points to 5.305% after the Treasury revamped its guidance on future note and bond sales, boosting expectations that it could reduce issuance of the longest-dated debt in 2027. Stocks also opened sharply higher given the elimination of the uncertainty associated with the election result and the pullback in both US Treasury yields and the price of oil in early Wednesday trading as well. Bond investors have long been uneasy about the US fiscal trajectory, and checks on Republican power — with the Democrats controlling Congress — may reduce the risk of additional spending or tax cuts that would require more Treasury issuance. “A divided government just speaks to less fiscal spending than we’ve seen in the last few years,” said Brij Khurana, portfolio manager at Wellington Management. “Typically when we get a divided government, it has been historically pretty good for Treasuries.” A Democratic sweep of both chambers would give the party greater control of the legislative agenda, although President Donald Trump would retain his veto and substantial executive powers. 

A key question is how he navigates the war in Iran from here, particularly since the resultant energy shock and higher cost of living were forefront among voters’ gripes. The election will also put renewed focus on the US debt limits, with the risk of prolonged government shutdowns and fiscal standoffs potentially. “If Congress fails passing a debt ceiling increase this year, we would consider it an added dollar negative,” wrote George Saravelos, Deutsche Bank AG global head of currency strategy. With the election’s full ramifications only set to become clearer over the medium term, Wall Street trained its sights on Wednesday’s quarterly refunding announcement. The Treasury said it anticipates maintaining auction sizes for nominal interest-bearing securities, known as coupons, and floating rate notes “for the next several quarters.” The new language in the so-called quarterly refunding announcement contrasts with wording in use for more than two years — which said auction sizes would be kept unchanged “for at least the next several quarters.” Many dealers expect the Treasury to pave the way for potential cuts in 2027 to sales of the longest-dated debt, balanced by bigger auctions of bills and shorter-term notes. “Treasury signaled coupon increases are coming with removal of ‘at least,’ so probably by end of next year,” Alex Pelle, senior US economist at Mizuho, wrote in a note. 

Impactful International News

Euro-area inflation quickened to double the European Central Bank’s target, supporting the case for interest rates to be raised further. Consumer prices rose 4% from a year ago in October, up from 3.8% the previous month, Eurostat said Wednesday. That’s the highest since September 2023 and in line with the median estimate in a Bloomberg survey. Core inflation excluding items like energy, which has driven the latest bout of price pressure, remained at 2.5% as anticipated, while the services gauge edged up to 3.3%. While the ECB kept borrowing costs unchanged last month, officials are signaling they’re ready to raise them for the third time since the Iran war erupted if the outlook for prices doesn’t improve. President Christine Lagarde has called the direction of travel clear, with several Governing Council members saying this week that October’s pause doesn’t mean monetary-policy tightening is over. Bundesbank President Joachim Nagel went further, saying another hike next month will probably be required if the inflation picture doesn’t improve. Investors and analysts predict a move in December, when fresh quarterly forecasts will offer a more comprehensive update on the 21-nation euro zone’s health. The former group expects the deposit rate to reach 3% or higher next year from 2.5% now.

The Bank of England on Thursday signaled it was poised to raise interest rates again in the coming months as policymakers backed the first increase in more than three years and warned inflation would approach 5% next year. In a more hawkish decision than had been anticipated, the Monetary Policy Committee voted 8-1 to lift rates by a quarter point to 4%, prompting traders to ramp up bets on another move as soon as next month. External member Catherine Mann argued for a half-point increase, while Governor Andrew Bailey said that he could see the “argument for a further increase in rates and thereafter taking a more conditional approach” toward policy. “Unless progress towards resolving the conflict is made, or there is other news which softens the risk to inflationary pressures, a further increase in bank rate may be warranted,” he said in the press conference following the decision. “Today’s increase should not be seen as the first in an inevitable long sequence of hikes.” Traders added to bets on BOE interest-rate hikes to price around a 50% chance of an increase in December, while almost pricing three more quarter-point hikes by the end of next year. Two-year gilt yields ticked three basis points up to 4.77%. The pound steadied at $1.3462. British households are already suffering a sharp squeeze in living standards caused by higher energy and fuel costs, with energy bills forecast to increase by 25% in January, when the regulated price cap resets, with a further increase in April. The BOE forecasts consumer price inflation to peak at 4.9% in the second quarter of next year, its highest since September 2023. CPI falls below the 2% target in 2029 using a path for bank rate that assumes a peak of 4.75% to 5%. That would imply just one or two more hikes are needed. 

Despite a sharp increase in motor fuel prices, mortgage rates and energy bills, the UK economy is whirring. Growth in the three months through August was a respectable 0.7% and the labor market is showing signs of stabilizing after a two-year downturn. Unemployment fell to 4.7%, the lowest level since mid-2025, and employers added 13,000 jobs in September. UK growth matched the US and outpaced all other Group of Seven peers in the first half, with AI investment estimated to have made a significant contribution. Bailey revealed that, before the Middle East conflict erupted, he expected rates to be cut twice this year. Instead, they are now at 4.0% after this week’s increase. Vlieghe was one of the more dovish members of the committee during his six years, which makes his hawkish warning all the more striking. Current MPC hawks such as chief economist Huw Pill and external member Megan Greene unsurprisingly agree. “A higher R-star means perhaps that you have been less restrictive than you thought,” Pill said at a Reinventing Bretton Woods event on Oct. 15. “Maybe rates, on average, will be that little bit higher.” Greene said faster growth and a stronger jobs market are proof that policy is not bearing down on inflation as much as thought.

The argument that the neutral rate of interest is higher today hinges on AI infrastructure, but also on debt-funded government spending. Around $3 trillion will be poured into chips and data centers by 2030 as hyperscalers race to beat their rivals, according to Moody’s. Meanwhile, G7 nations will increase general government debt to 102% from 94% of GDP — a borrowing spree of around $4.5 trillion in today’s money — the International Monetary Fund forecasts, as nations spend more on defense and ageing populations. The scale is upending global macroeconomic forces. Economists extrapolate the neutral rate by weighing up the balance between savings and investment. A glut of savings suggests a lower R-star, an investment frenzy implies the opposite. “The forces that held borrowing costs low for a generation — an abundance of savings, a scarcity of investment opportunities and a world that trusted the US to be its banker — are shifting,” Jamie Rush, Bloomberg Economics’ director of global economics, said. “Like any other price, the price of money is set by supply and demand.” Dario Perkins, global economist at TS Lombard, noted this week that “the AI investment boom is rapidly becoming one of the largest infrastructure projects in history.” The pace of US data center roll-out as a share of GDP is faster than the 1960s Apollo space program and almost equivalent to the mid-1800s US railroad boom and the post WWII Marshall Plan to rebuild Europe after the Second World War, according to posts on social media by Fin Moorhouse, a researcher at Google Deepmind. “Money is being spent,” said Vlieghe. Since the pandemic the UK economy has grown 6%, consumption an even more sluggish 2% — but investment is up 16% and services exports are up 41%, he said. “There is something about an export and investment-driven recovery which makes it very likely that global factors here are at play.” More than half of the rise in the UK’s benchmark borrowing costs this year can be attributed to the AI investment boom and investors demanding higher premiums, NIESR has calculated. Only 40% is a direct response to higher energy costs from the Middle East conflict. “That casts a little bit of doubt on the idea that this is a temporary shock, and we may see higher interest rates persistently from here,” said NIESR director David Aikman. A survey of market participants by the BOE last month put the average estimate of neutral at 3.25%. Rob Wood, chief UK economist at Pantheon Macroeconomics, said a model designed by the US Federal Reserve Bank of Richmond suggested the UK’s R-star is 3.75% and that it could even be higher. Whatever the rate is, the growing consensus is that it has risen and everyone – from politicians to the general public – needs to get used to the new normal.

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