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- The labor market continues to cool at a measured pace, with softer hiring offset by low jobless claims and steady wage gains, helping support economic momentum.
- Corporate profits are expected to expand across all S&P 500 sectors in 2026, supporting a more balanced backdrop for equity markets.
- September’s postponed inflation data showed stable price pressures, keeping the option of a Fed rate cut in play for next week.
1. Labor Market Softens but Continues to Show Underlying Stability
Last week’s ADP November jobs report indicated that private payrolls declined by an estimated 32,000, marking a sharper slowdown than expected. The data revealed notable weakness among small firms, which cut a substantial number of positions.1 With the official Bureau of Labor Statistics report delayed due to the government shutdown, this update became one of the last major labor indicators available ahead of this week’s Federal Reserve meeting to decide interest rates. While the ADP report does not always align with the final payroll numbers, the softening trend adds to expectations that the Fed may lower interest rates, an outcome that futures markets increasingly anticipate.
At the same time, weekly jobless claims offered a more tempered view. Initial claims declined to 191,000, and continuing claims held near 1.94 million, both slightly better than forecasted.2 Announced layoffs also eased in November, suggesting employers remain cautious but are not aggressively reducing staff.3 Job openings continue to drift lower, but remain consistent with an environment of moderate hiring rather than rapid contraction.1 Wage growth continues to outpace inflation, supporting household spending and helping maintain overall economic momentum, despite slower job gains.1
2. Broad-Based Earnings Strength Set to Continue Into 2026
Corporate earnings delivered another strong year in 2025, with S&P 500 profits on track to rise more than 11%, following a solid gain of 10.4% in 2024.4 Much of this momentum came from familiar leaders: Information Technology companies are expected to post earnings growth above 20%, while the Communication Services sector is on track for earnings growth of nearly 17%.4 These results helped both sectors remain top performers and key drivers of U.S. equity returns over the past several years.
Looking ahead, we expect profit growth in 2026 to broaden meaningfully, shifting toward more balanced market leadership. Positive earnings contributions are projected from all 11 sectors of the index, with continued double-digit gains in the Technology and Communication Services sectors.5 Meanwhile, cyclical areas such as Industrials, Consumer Discretionary, and Materials could also see profit growth above 11%.5 A broader earnings base would reduce reliance on a narrow group of sectors and support the case for maintaining diversified portfolios as market conditions evolve.
3. Delayed Inflation Report Still Points to Steady Inflation Trend
After an extended shutdown-related delay, the government released September personal consumption expenditures (PCE) data. While these inflation numbers usually play a central role in policy decisions, the unusual lag may prompt the Federal Reserve to review them with caution. Even so, the figures offer a useful view of how inflation evolved leading into the Fall.
Core PCE, the measure that removes food and energy, rose 0.2% for the month and 2.8% from last year.6 Headline PCE moved slightly higher, increasing 0.3% on the month and matching the same 2.8% annual pace.6 Both readings were close to expectations and showed that inflation continued to ease at a measured rate.
Despite being several months old, the September data show steady monthly gains and a stable annual trend of cooling inflation. This backdrop keeps the door open for a rate cut at the Federal Reserve’s meeting this week.
For the period ending 11/28/25.
* Small-cap stocks are represented by the Russell 2000® Index. International stocks are represented by the MSCI EAFE. Bonds are represented by the Bloomberg US Aggregate Bond Index. Oil is represented by WTI Oil (West Texas Intermediate Oil), a benchmark for light, sweet crude oil and a primary measure for pricing oil contracts and futures in the U.S.
Sources
1 ADP
2 U.S Department of Labor
3 Challenger, Gray & Christmas
4 YCharts
5 Reuters
6 U.S. Bureau of Labor Statistics
Disclosures
Cary Street Partners is the trade name used by Cary Street Partners LLC, Member FINRA/SIPC; Cary Street Partners Investment Advisory LLC and Cary Street Partners Asset Management LLC, registered investment advisers. Registration does not imply a certain level of skill or training.
Any opinions expressed here are those of the authors, and such statements or opinions do not necessarily represent the opinions of Cary Street Partners. These are statements of judgment as of a certain date and are subject to future change without notice. Future predictions are subject to certain risks and uncertainties, which could cause actual results to differ from those currently anticipated or projected.
These materials are furnished for informational and illustrative purposes only, to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. Materials have been compiled from sources believed to be reliable; however, Cary Street Partners does not guarantee the accuracy or completeness of the information presented. Such information is not intended to be complete or to constitute all the information necessary to evaluate adequately the consequences of investing in any securities, financial instruments, or strategies described herein.
Cary Street Partners and its affiliates are broker-dealers and registered investment advisers and do not provide tax or legal advice; no one should act upon any tax or legal information contained herein without consulting a tax professional or an attorney.
We undertake no duty or obligation to publicly update or revise the information contained in these materials. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of securities, or information about the market, as indicative of future results.
A Composite PMI is a single index that tracks economic activity by combining the performance of both the manufacturing and services sectors, providing a comprehensive overview of overall business conditions.
Nothing contained herein should be considered a solicitation to purchase or sell any specific securities or investment-related services. It should not be assumed that any of the securities transactions or holdings discussed were, or will prove to be, profitable.
The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending. The CPI is a measure of inflation and deflation. The CPI report uses a different survey methodology, price samples, and index weights than the producer price index (PPI).
Additional Disclosures: International and Foreign Securities, Fixed Income Investments, the Consumer Price Index, the Producer Price Index.
Comparative Index Descriptions: The Standard & Poor’s (S&P) 500 Index, The Russell 200® Index, The NASDAQ Composite Index, The MSCI EAFE Index, Dow Jones Industrial Average® (Dow Jones or DJIA), The Bloomberg Barclays US Aggregate Bond Index (US Agg Bond), The CBOE Volatility Index (VIX). CSP2025061_38
