Weekly Economic Update: November 10th, 2026

Midterm elections add new volatility to already volatile markets

Last week was a prime example of why we shouldn’t make investing decisions based on the news cycle. First we had the midterm election results.¹ Markets initially rallied because the results were quick and clear: Republicans lost their majorities in the House and Senate, giving us divided government. That’s a blissful prospect for markets, because it can focus on what it does best (making money) while our legislature argues and gets nothing done. Divided government typically results in no big initiatives out of Washington D.C., and markets spent Wednesday rejoicing at the results.²

As Thursday dawned, markets woke up to the reality that perhaps the biggest threat wasn’t going to come from D.C. in the next two years, but from the states that elected new governors and reshuffled their state legislators. Specifically, there was a lot of talk (and frankly hostility) across both parties regarding AI and the building of data centers.³

The prospect of possible new regulations, building moratoriums and increased oversight made markets nervous, leading to a dramatic rout of AI, AI-related and big tech stocks. The Nasdaq dropped over 5.5%, a loss of $2.5 trillion and the worst one-day destruction of value in its history.⁴

Markets bounced back somewhat on Friday, but the short-term damage was done. Thursday was clearly an overreaction, but here’s something to think about. Since 1950, we’ve had 19 midterm elections — and the S&P 500 has a perfect record for showing gains in the year after the midterms.⁵ And the index has shown an average gain of 15% in the 12-month period following midterms when the outcome was a divided government.⁶

So whether you were bummed or elated about the election results, from a market perspective we’re actually in a good place. Don’t let the emotionally charged highs and lows of the past week allow you to stray from your plan, which is designed to withstand these types of events. Focus on the long term instead.

Strong jobs growth pretty much cements a December rate increase

The latest Bureau of Labor Statistics nonfarm payrolls report was strong on Friday.⁷ Numbers for September were revised upward from +29,000 to +60,000, while the October number came in at +165,000 jobs against the consensus estimate of +65,000. August jobs were also revised upward from +133,000 to +186,000, a whopping increase of 53,000. The unemployment rate dipped to 4.1% from 4.2%, the 62^nd month (over five years) when unemployment was below 5%. And the labor participation rate ticked up to 61.9%, another encouraging sign.

Other jobs data was also encouraging. The newest Job Openings and Labor Turnover Summary (JOLTS) report showed we had 7.52 million job openings in September.⁸ And on Wednesday, the ADP employment report showed we added 86,000 private-sector jobs in October.⁹

Sounds like the economy is humming and employment is strong, so it appears more and more likely that the Federal Reserve has a wide-open path to hike rates at its December meeting. Right now, the odds are running around 80% that we’ll get a quarter-point increase next month.¹⁰ Next week, we’ll see how the Consumer Price Index (CPI) looks to gauge how much the Fed needs to do at its last meeting of the year. The conversation on how much or how little rates will need to be adjusted will shift after the new inflation readings. For now, both the economy and jobs appear on solid footing, and that’s a good thing.

Coming this week

• The midterms are out of the way, but the AI hangover will be with us for a while until the market quits assuming the worst-case scenarios about regulations and data center construction.
• Monday will feature wall-to-wall Fed speakers. Don’t look for much insight given that CPI isn’t out until the following day.
• Tuesday we’ll have more speakers, but this time they’ll have the latest CPI and Core CPI data. We’re not expecting much of an improvement over last month, which will fuel more talk of rate increases.
• We’ll get the latest MBA mortgage applications number on Wednesday to give us a peek into the health of the housing market.
• Finally, the Producer Price Index (PPI) and Core PPI will be released on Friday. Like CPI earlier in the week, we’re not expecting any dramatic changes.
• The wild card this week will be if President Trump ramps up activities with Iran, as he’s been promising to do after the midterms.
• Third-quarter earnings are winding down.¹¹ As of Nov. 6, 88% of S&P 500 companies have reported results, with 84% reporting positive earnings per share (EPS) and 74% reporting positive revenue. So far, the blended year-over-year earnings growth rate for the index is 31.4%. If that’s the actual growth rate for the quarter, it will mark the third-straight quarter of earnings growth above 25% for the index.
• For the fourth quarter, 32 S&P 500 companies have issued negative EPS guidance and 43 have issued positive. Valuation for the S&P 500 is closer to the 15-year historical average, with the forward 12-month price-to-earnings (P/E) ratio at 17.7 versus 20.1 last quarter. That’s below both the 5-year (19.8) and the 10-year (19.1) averages.

Sources:

¹ Ally J. Levine and Andy Sullivan. Reuters. Nov. 6, 2026. “US midterm results in maps and charts.” https://www.reuters.com/graphics/US-ELECTIONS/GRAPHICS-BLOG/akpelkldzvr/. Accessed Nov. 8, 2026.

² John Towfighi and Matt Egan. CNN. Nov. 4, 2026. “Dow has best post-midterm elections day in 44 years as Democrats take control of Congress.” https://www.cnn.com/2026/11/04/investing/us-markets-midterm-elections. Accessed Nov. 8, 2026.

³ Theo Leggett and Osmond Chia. BBC. Nov. 6, 2026. “Why the US midterms sparked an AI stock selloff.” https://www.bbc.com/news/articles/crlykkzwwpydo. Accessed Nov. 8, 2026.

⁴ Elisabeth Buchwald, John Towfighi and Matt Egan. CNN. Nov. 5, 2026. “Massive tech sell-off wipes $2.5 trillion from the stock market.” https://www.cnn.com/2026/11/05/investing/tech-heavy-nasdaq-plunges. Accessed Nov. 8, 2026.

⁵ Colleen Cabili. Quartz. Nov. 4, 2026. “Stocks after midterms: 10 findings on the S&P 500’s record since 1950.” https://qz.com/stock-market-after-midterm-elections-since-1950#stocks-after-midterms-10-findings-on-the-sp-500s-record-since-1950. Accessed Nov. 8, 2026.

⁶ Deena Zaidi and Nick Wells. CNBC. Nov. 2, 2026. “Stock market after midterm elections: What S&P 500 history shows.” https://www.cnbc.com/2026/11/02/stock-market-after-midterm-elections-sp-500-history.html. Accessed Nov. 8, 2026.

⁷ U.S. Bureau of Labor Statistics. Nov. 6, 2026. “Employment Situation Summary.” https://www.bls.gov/news.release/empsit.nr0.htm. Accessed Nov. 8, 2026.

⁸ U.S. Bureau of Labor Statistics. Nov. 3, 2026. “Job Openings and Labor Turnover Summary.” https://www.bls.gov/news.release/jolts.nr0.htm. Accessed Nov. 8, 2026.

⁹ ADP Research. October 2026. “ADP National Employment Report.” https://adpemploymentreport.com/. Accessed Nov. 8, 2026.

¹⁰ CME Group. “FedWatch.” https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool. Accessed Nov. 8, 2026.

¹¹ John Butters. FactSet. Nov. 6, 2026. “Earnings Insight.” https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_110626.pdf. Accessed Nov. 8, 2026.

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