By Islam El-Sakka
The U.S. Labor Department will release its October jobs report on Friday, providing the first major economic data since the midterm elections. The report arrives as financial markets react to the election outcome and the Federal Reserve weighs further interest rate increases.
Market reaction to election results
The Dow Jones Industrial Average posted its best single-day gain in more than a year on Wednesday, a day after the midterms. A selloff on Thursday erased those gains as investors assessed risks to the technology sector from a strengthened Democratic presence in Congress.
Federal Reserve policy outlook
Policymakers are considering a rate hike that could help curb inflation but risks slowing hiring. The Fed raised rates by a quarter percentage point in September, its first increase since 2023. Market indicators show a 68% probability of another quarter-point hike at the December meeting, according to the CME Group's FedWatch Tool.
Job growth expectations
Economists forecast employers added 59,000 jobs in October, an improvement from 29,000 in September but well below the 133,000 added in August. The economy has averaged about 68,000 jobs per month over the first nine months of 2026, up from an average of 10,000 per month in 2025.
Inflation backdrop
Annual inflation stood at 3.7% in September, more than a percentage point above the Fed's 2% target. The Iran war pushed gasoline prices higher and drove inflation to a three-year high in May. While price pressures eased over the summer, continued conflict has kept inflation well above pre-war levels.
