Huge September jobs report, Nvidia & Walmart earnings breakdown

[00:00:00] Julie Hyman: Welcome to Yahoo Finance's special coverage of the September Jobs Report. I'm Julie Hyman, and we are just moments away from the September payroll sprint. Let's get a check on stock futures ahead of those numbers. Of course, there is a big other factor to consider today when you're looking at stock futures, and that is NVIDIA and its blowout numbers that were reported last night. That's sending NASDAQ futures higher by 1.6%. S&P and Dow futures are also participating, and we'll see how the September Jobs Report affects that. Brian Sazi is here with me on set, our executive editor. Saz, this has got to be one of the weirdest jobs days in recent memory. Because of the government shutdown, we're getting delayed numbers from September. [00:00:39] Speaker 2: I don't even know what I had for dinner last night, let alone what I did back in September. But look, this is- Well, we know you were working. Yeah, I'm working, yes. That is the consistent. But look, this NVIDIA report, we'll get into it, suggests the JAWS report probably wasn't good. Look at all these AI chatbots coming out of here taking JAWS. No, but for real, I think Goldman was looking at for 80,000 jobs in September. But I just think the most important number here, I mean, is everything we heard from NVIDIA, everything we heard from a Walmart. And I get the, we want to play up the jobs report, but it's a backward-looking indicator. We need a lot more data. We already have a sense that the labor market is weak. And that's why I still don't think that rate cut is off the table for December. [00:01:13] Julie Hyman: Yeah, even though the odds of the rate cut have certainly gone down a lot. Yes. Just to let folks know what the consensus estimates are here, for non-farm payrolls, economists on average are looking for a gain of 51,000 for September. The unemployment rate at 4.3% is the number that we're watching for there. So those are the two key numbers that we're going to be watching. Remember, Saaz, as we talk about all this, we're not going to get an October job support. Full stop, not happening. Nothing. We'll get, we have to wait for the November job support, which comes in early December, for the next batch of data. [00:01:47] Speaker 2: Well, I think the Fed has gotten, you know, during the shutdown, we had that ADP data. I mean, that stuff wasn't great at all. We've had continued layoffs in the tech sector. That stuff is not good at all. A lot of CEOs that we talk to on these programs. [00:01:57] Julie Hyman: Okay, hold that thought because we're about to get the numbers out. 119,000, 119,000. That is the job gains that we saw in September. The unemployment rate actually ticking up, however, to 4.4%. And there's also a revision to mention for the month of August. Instead of a gain of 22,000, we actually lost 4,000 jobs. So I'll have to go back and see the last time we had a negative job reading. But August, that might be the real surprise here. An August job decline of 4,000. And actually, it looks like there were some revisions lower the prior month as well. Looking at some of the other numbers here, the labor force participation rate ticking up by a tenth of 1% to 62.4%. Average hourly earnings rising a little bit less than economists had anticipated, two tenths of 1% month over month instead of three tenths. And that means average hourly earnings on a year-over-year basis is actually a little bit better, up by 3.8%. So really interesting here to see those revisions saws. And that's something that, you know, again, even, yes, it is lagging data, but that's a bit of an alarming number. [00:03:12] Speaker 2: We've got a taste of something. And the taste of something is this. It was a reminder that before the government shut down, the labor market was cooling. So this is another reminder in that thesis and another reminder why the Fed has been out here cutting rates and should probably continue to do so into early next year. Those revisions down are not good. And we can continue to get those revisions down. [00:03:32] Julie Hyman: Yeah, it looks like combined in July and August, the revision was 33,000 lower than previously reported. So again, that took the August number to a negative number. But this also, you know, sort of shines a light on or highlights once again questions over revisions that we get to this job support. And that was something that the BLS was going to sort of try and tackle. But, you know, I guess there's only so much you can do when you're trying to get companies to answer your survey to let you know what's going on. Pick up the phone. Yeah, exactly. All right, let's talk more about what's going on here this morning and what we see in these numbers. And Dow futures still hanging on to the gains, even extending gains a little bit here this morning. Let's talk more about the September jobs report. Brian Jacobson, Annex Wealth Management, Chief Economist and Strategist, is joining us, along with Greg Daco, EY, Chief Economist, and Kathy Jones, Charles Schwab, Chief Fixed Income Strategist. Brian Sazi, of course, is still with me on set here. Greg Daco, I want to start with you here. What do you make of these numbers? How are we to read the numbers when, you know, August or September looks so strong and then we got a negative reading for August? [00:04:41] Speaker 3: Yeah, I think what this shows is that there is some reassuring element in this September report, but it's stale by the time it has come out. It's stale in the sense that what we're really going to be focused on is what has happened over the course of October and November with this government shutdown, disrupting economic activity, disrupting the pace of employment growth, and leading to renewed economic uncertainty, which is a key factor as we navigate into 2026. I think a couple of notable points here in this report. One, we did have a slight rise in the unemployment rate. This hadn't risen much because there was downward pressure on labor supply. We're seeing here a rise in the unemployment rate at the same time as the labor force participation is rising. So it means that more people are on the sidelines of the labor market as of the end of the summer. And the other thing that's interesting to watch, especially from a Fed perspective, is that we're seeing downward pressure in terms of wage growth momentum. We know that a lot of Fed policymakers are hesitant to ease monetary policy further because of the risk of persistent inflation from tariffs. This type of downward pressure on wage growth is an indication that second-round effects via wage growth are unlikely to materialize in a labor market that is softening. [00:05:55] Speaker 2: Kathy, does this change how you were thinking about the direction of interest rates moving forward? [00:06:01] Speaker 4: No, it really doesn't. As Greg mentioned, it's pretty old news at this stage of the game and backward looking. So it will be important to get more current data. And I would note that the jobless claims came in at $220,000, which is not really a bad number at all in terms of kind of contemporary news about the labor market. But I think even though wage pressure eased a little bit at 3.7%, it's still up there at a level that perhaps the Fed isn't particularly comfortable with. And job growth at this level is higher than expectations. So despite the downward revision, it does say that in September, the job market was not cratering. It was not falling apart. Now, again, it will be more important to get the data for more recent times. But we have been in the camp that we're not looking for a December rate cut. And I don't think at this stage of the game, this gives the Fed the ammunition it needs to change and cut rates. I think it's still a divided Fed based on these numbers. [00:07:07] Julie Hyman: What do you think, Brian? Because I feel like you have been a little bit more concerned about the labor market. [00:07:13] Speaker 5: Yeah, I have been. And I think a lot of it just comes from just all the data that we've seen besides this, right? I mean, dated data is better than no data. But when we look at the other information that we have, especially the ADP numbers, the survey based data from ISM, you can also look at the notes in the beige book, right? All of that really does point to this continued slowing in the job market. And we want the Fed to be a little bit more preemptive to think about the future and not just reacting to the data, especially when they don't have the data. Otherwise, you fall into that streetlight effect, right? That old joke about the person who is looking for their keys underneath the streetlight because that's where the light is, even if that's not where they drop their keys. And if that's the Fed's only excuse for not cutting, I think that's really misguided. Governor Waller, I think, made a very good case about how you can look at all the other data that's out there and come to the conclusion that the risks aren't exactly evenly split between inflation and with growth. It's more on the labor side, especially now that we got a little bit of tariff reprieve, the very visible grocery prices. Those should be maybe coming down that we got some of the exemptions on the tariffs and that. So to me, it really underscores that the Fed officials who are hanging their hat on we're going to get inflation because of tariffs, a lot of the data is undermining their arguments here. [00:08:37] Julie Hyman: Well, and it looks like because the BLS has rescheduled the next jobs report, right, that if I'm not mistaken, we're not going to get it until after the Fed meets next. Right, Greg. So, I mean, what does then the Fed do? We're still in this sort of murky situation. [00:08:55] Speaker 3: We are. And I think Kathy made a great point here that there are multiple factions within the Fed. It's not like there are two camps, two traditional camps with doves on one hand and hawks on the other. We really have a few factions within policymakers at the Fed that are somewhat essentially on the edge of favoring further easing, further immediate easing. I think the minutes yesterday were quite telling in that regard. Most participants favor some further easing in the Fed funds rate. But while several are in favor of a December rate cut, many are essentially favoring a skip in December because they don't have the data. And with the BLS now providing this new release date or a combined October and November payroll report and only the household survey data for November on December 16th, which is a week after the next FOMC meeting, I think that would favor essentially most Fed policymakers holding on, preferring to stay at the current Fed funds rate and not favoring another rate cut. Because essentially, when they're asking these three questions, how persistent is the inflation pass-through, how weak is the labor market, and how close are we to neutral? They don't really have the answers without more economic data. [00:10:10] Speaker 2: Brian, let me get back to you. I was really blown away by what NVIDIA CEO Jensen Wong was talking about in the earnings call yesterday. It reminded me how embedded AI is becoming in our society, even in the early stages. Is the reality that as AI becomes more just prevalent in our economy, that we are just done getting big, blowout jobs day reports? [00:10:33] Speaker 3: I don't know that we're done getting big, blowout jobs report. I think one of the key factors here is that the foundations for growth are narrow pillars, three narrow pillars. There's affluent consumers on the one hand, the AI investment boom that you just discussed, and that's the price appreciation that are all tied with this optimism around AI. The other part of the picture is what's happening to labor supply. We've had a massive negative shock when it comes to labor supply due to immigration restraints. And that has meant that the break-even jobs rate, essentially the rate at which we don't see an increase in the unemployment rate, has fallen to somewhere between zero and 50. That's really the fundamental factors that's going to push the job growth figures towards a lower end. But if you look at AI, I think one of the potential impacts that it has beyond just the short-term capital investment that we're seeing is essentially lifting the U.S. economy's potential growth rate over the next few years. This is not a October or November story. It's really over the next few years that we're seeing this potential for greater capacity, greater productivity to enhance the U.S. economy's growth potential. And that means that over the next few years, we could actually start to see more job growth in sectors that are dependent on AI. But for sure, sectors where there are potential for replacements of certain workers, that's where you're going to see structural downward pressure on job growth in those sectors. [00:12:02] Julie Hyman: Well, and that's exactly the thing that Saaz talked to Hayden Brown about. She's the CEO of Upwork, which is a jobs platform. This is what she had to say about how AI is changing the game. [00:12:14] Speaker 6: There are places where AI is creating new opportunities, and we're also seeing categories of work that people have said are going to be decimated, like admin assistants or lawyers. Those are also growing on our platform. And so I think the headlines are bleak around AI destroying jobs or around just the market overall being tough. But in the contingent economy, we're seeing a lot of strength. And I think companies are really moving from a more fixed and full-time employment model to something that taps into the flexibility and skills of contract workers. [00:12:44] Julie Hyman: Brian, I'm curious how you're thinking about the whole AI work equation here because, okay, so it's more contingent workers. Not everybody wants to be a contingent worker. A lot of people like full-time jobs. [00:12:57] Speaker 5: That's right. Yes, we do. I mean, I know I really like it. You get more certainty as far as with your payrolls. But I think a keyword that she used there, decimated, right? But what does that actually mean? Cutting by 10% technically, right? So if you think about it, you are going to have some sort of reduction in certain traditional areas. You're going to have all sorts of new jobs being created. When we look at the U.S. economy overall, in the late 1800s, you know, more than 90% of the workforce was in agriculture, and now it's like, what, 2%? So lots of different changes. This one just might happen a lot faster. But if we think back to even, we don't have to go back to the late 1800s. Just go back to the early 2000s, where we had strong GDP growth, but actually negative payrolls growth. A lot of that variety of factors, demographic shifts, technological changes. But in terms of the changes to the economy, to think over the longer term, I think that it is really about what are the new jobs and new opportunities that are going to be created. I tend to be a little bit more of an optimist in that regard. I like to think of it as being a realist, not necessarily being too optimistic. But really for investors, I think that we don't have to worry so much about, are we going to have blowout jobs numbers or not? It's really about the earnings numbers, right? I mean, fundamentally, that's what investors are looking at. And does this really create the environment where the ones who adopt AI, but are able to demonstrate that return on that investment, they're the ones who are going to benefit. And it can be in any sector. It's not just in chips or semiconductors or technology. It's across all the sectors. [00:14:28] Julie Hyman: Kathy, I'm curious how you're thinking about the economic impacts of all of this and then the read-through to rates, right? If we're looking at more productivity, for example, if we're potentially looking at more GDP, does that imply rates stay under a certain, you know, that we see continued lowering pressure on rates? [00:14:48] Speaker 4: Yeah, if we get higher productivity, we can get higher real growth without inflation, and that could allow yields to come down a bit. I think it's too early to kind of measure the impact of it. I agree that it will eliminate some jobs, but it's probably going to create a whole bunch of jobs, and net-net, it's a net positive for the economy. But it's too early to play out. I think we always try to read the – interpret these developments in the very short run and extrapolate it into the future. I think it's going to take some time to play out. But it would be good in terms of holding down real rates because our potential growth rate would be higher. But I think in the immediate term, what we're looking at is a structural decline in employment due to the immigration and the – but with wages, it's holding at a pretty high level, inflation holding at a pretty high level right now. The case for cutting rates now preemptively in anticipation of a slowdown when we have the big, beautiful bill out there lifting higher-end consumers, I just don't think the case is very strong whether you include AI or not in it right now. [00:16:03] Julie Hyman: Well, at the moment, we're seeing indications tick up in terms of market perception of whether we're going to get a cut in December, but as we know, that changes very quickly and isn't always right. Everybody's going to stay with me. And for right now, we're going to send it over to our Jared Blickery for a look at the movers on the back of that September payrolls report. [00:16:23] Speaker 7: Thank you, Julie. Let's take a look at the entire world. First of all, we're going to see a lot of green here. This is an earnings story, it's an NVIDIA story, so I'm going to pull up some of the stock futures that we have here. Here's the Dow. That is up 390 points. This goes back to midnight, but I want to extend this back two days because it was yesterday afternoon that we really got lift off thanks to NVIDIA, and we've just been holding on to those gains all night, and now we have slightly exceeded them. So not the biggest reaction off this report, even though we're sitting on some pretty big games here. S&P 500 futures, very similar story. And here's the NASDAQ up 2%, so pointing to some decent-sized gains today, very similar chart as well. And if I show you the last two months, you can really take this latest downturn with, you can really see the impact of this latest downturn in terms of the technicals. We are right up against that trend line there. If we break through today, that's probably an all-clear for the bulls, and I wouldn't be surprised if we see a run at the record highs again. We're not that far off. But it just seems that way when you're in a bull market and we hyper-focus on all these things on a day-to-day basis. So here are the, what's the bond market is doing? We have the 10-year Treasury note futures up slightly, and they move inversely to price. So, excuse me, to yields. Price moves inversely to yields. So the yield is actually coming down here on the 10-year tenor, and on the two-year, it is also coming down, this chart going up, because those are the bond prices. I'll show you a couple other markets, gold futures, muted reaction, still holding the $4,000 level, that's a pretty big one right there. And we can also take a look at the, let's take a look at Bitcoin real quickly, that is at $91,000, very muted reaction off that. In previous payroll reports, sometimes we've seen Bitcoin as a leader, not so today. And I also want to check out the VIX, because that was up to about $23,000, $24,000 yesterday, that is down nicely, and we're seeing those gains, those declines deepen on this report, so that's good, because there is less fear in the market. Now, here's a look at the sector action, this is what happened yesterday, tech was the leader, it was the only outperformer. Now, if I put on the pre-market quotes, you're going to see tech is the leader once again, but in the pre-market it's up 2.27%. That is a decent amount, that is reflecting those NVIDIA, that NVIDIA beat, communications services and consumer discretionary, those are the other two leading sectors, each of those up more than 1%. Those are the mega cap sectors, so all the sectors looking in the green right now in the pre-market, and if we take a look at the NASDAQ 100 board, you can really see NVIDIA just flying here, it is up 5% in extended hours. This chart is what happened yesterday, it was up 2.85%, and if I show you the two month chart, this does not reflect the pre-market gains, but you're going to see that pop to somewhere right in there, and we'll see what happens with NVIDIA today. I just want to point out one more thing. I'm going to show you the quarter to date results of the sector action. This has been a story of healthcare since October 1st. October 1st, also the beginning of the government shutdown, so you can see XLV is up 6%, energy and utilities in the green, but they really haven't shown much else in terms of the sector action, and it really has been a story of healthcare. So we'll have to see if the AI trade can come to the forefront in investors' minds once again. [00:19:43] Julie Hyman: We shall see that indeed. Jared, thanks a lot. Appreciate it. Coming up, we'll have more of the September jobs report, and also dig into the macro impact of those NVIDIA earnings. We'll be right back. [00:19:55] Speaker 8: There's been a lot of talk about an AI bubble. From our vantage point, we see something very different. [00:20:03] Julie Hyman: That was NVIDIA CEO Jensen Wong speaking after the company top third quarter estimates and issued strong guidance. Still with me, Brian Jacobson, Annex Wealth Management Chief Economist and Strategist, Greg Daco, EY Chief Economist, Kathy Jones, Charles Schwab, Chief Fixed Income Strategist, and our Brian Sazi sitting right next to me. Brian Jacobson, we were just starting to talk about sort of the AI effect on the job market, but of course, it's had a big effect on the market broadly as well, and NVIDIA alone has had a big effect on all of this. When you see the numbers like we saw last night, what does that mean for the markets? Does that mean that the sort of sell-off that we've been having is done now? [00:20:42] Speaker 5: Well, hopefully, at least it's a temporary reprieve, right? Because now it's just about, well, now we can worry about what the next report is going to be and what the next guidance will be. And that's just, I think, the nature of investing in equities, and that's what contributes to the volatility. There's always something to worry about is when will this trend change? When you see their revenues up 62% over the last year, that's really outstanding numbers, but trees don't grow to the sky. So we know that will change, and when I was listening to his comments during the earnings call, it did strike me as being like, well, you know, keep in mind, he is kind of like this chief evangelist for AI. He wants to paint a rosier picture, and it does obviously need to be realistic, but at least for the near term, the next year, we could continue to see these kind of decent numbers, but it will begin to tame. And that's where, from an investing perspective, we're still looking at, you know, don't be so overweight, the large cap stocks that have done so well. Take some of that off the table if it fits your financial plan, your tax situation, and then look at some of the other areas that could be more the beneficiaries of the adoption of this technology. So I think that in terms of are there risks associated with having such a concentrated market? Yeah, but that's been a story for, what, the last 10 years now? So sometimes people get, I think we're getting a little fatigued with the concentration risk story here. [00:22:08] Speaker 2: Kathy, what's more important to you at this point in the market cycle, NVIDIA coming out with a good quarter and upbeat outlook, or some random Fed official next week saying, hey, you know what, I now support a rate cut? [00:22:20] Speaker 4: Well, as a fixed income person, it's what the Fed folks have to say that's important to me. And I think what we're going to hear, my guess is we're going to hear a lot of different opinions from various Fed officials. You know, you have, say, the Hawks, Schmid, who's leading it and saying, look, you know, we haven't landed inflation yet. We need proof that this tariff pass-through is behind us. And meanwhile, the employment market, although job growth is slowed down, that's more structural. We still have a low unemployment rate and rising wages. There's not a lot of evidence that it's cratering right now. So let's hold off and wait. And then you have the doves, who are on the other side and say, let's get preemptive. Job growth is slowed. Let's get ahead of it. We think the tariff impact on inflation is over. And I think we'll have to parse through, because there's so many different views at the Fed. We'll have to parse through where they are. But to me, that's going to be more important than what happens in the tech universe. [00:23:22] Julie Hyman: Yes, that makes sense that a rates person is watching what the Fed is doing. I mean, Greg, I am curious, though, when the data center buildout is currently such a huge part of GDP, right? It's a huge part of the market. In the past, when we've seen these dominant technological trends, how sustainable are they to remain sort of so narrowly focused on this one thing powering so much economic growth? [00:23:50] Speaker 3: Well, I think you allude to a great question here. Whenever you have a technological revolution, the first step, and we tend to overlook that, is the capital investment, essentially the infrastructure that will support that technological revolution. And that's what we're seeing. We're seeing essentially the buildout of data centers, of chips, of increased capacity even on the energy side to support this technological revolution. Now, is there going to be froth? There always is. Is there going to be a FOMO sentiment across many corporations as to are we behind the curve? Do we need to put money here? Yes, there is going to be excess investment. And so there are going to be corrections. The other point that you allude to is very important as well. Yes, AI has been contributing about a third of GDP growth over the first half of 2025. But the pace of growth is gradually starting to slow. If you look at the pace of growth of data centers construction, for instance, it's starting to slow. It's still growing, but it's growing at a more subdued pace. And as we enter a more mature phase of the infrastructure buildout, we're going to see less growth. And that's not necessarily a bad thing. It's just that we're maturing in this development of this new technology, this technological revolution that's taking hold. The productivity benefits are only now starting to be visible. There's a great St. Louis paper that looks at productivity growth across different sectors relative to AI adoption. And no surprise there, you're seeing the tech space. You're seeing the professional and business services space starting to see some productivity gains as a result of greater AI adoption. But we're only in the early innings of these benefits. [00:25:28] Julie Hyman: Well, we'll talk to you as things progress then, of course, Greg. Thanks so much for being here. Thanks to Kathy. Thanks to Brian Jacobson and Brian Sazi. Really appreciate it, everybody. And stay tuned for Morning Brief. We've got more coverage on the September jobs report and NVIDIA earnings. We see futures actually extending their gains after the jobs report. NASDAQ futures put into a gain of 2%. Welcome to Yahoo Finance's flagship show, Morning Brief. I'm Julie Hyman. Let's get to the three things you need to know today. First off, U.S. stock futures extending gains following the release of the September jobs report. Data for the month, which has been on hold amid the government shutdown, showed that 119,000 jobs were added. That's well above the 51,000 estimate. However, August gains were revised to show the U.S. actually lost 4,000 jobs in the month. But the odds of a December rate cut still remain low. This is the final payrolls report before the Fed's December meeting. The BLS announced there will be no October jobs report. The November payrolls data due out December 16th after the Fed meeting. Plus, NVIDIA shares popping this morning. Results from the AI chip giant blew past expectations, easing bubble and valuation concerns on Wall Street. The world's most valuable company expects sales of about $65 billion for the current quarter. That's roughly $3 billion more than analysts expected. Those strong results helping restore a sense of calm in markets after weeks of heavy selling in technology stocks. And Walmart is boosting its full-year sales outlook. It's a sign that the world's biggest retailer is winning over price-sensitive shoppers. E-commerce among the bright spots. And Walmart continues to broaden delivery areas, lower shipping costs, and expand its third-party marketplace. The company separately announced it is transferring the listing of its stock to the NASDAQ. And a programming note. Tune in to Yahoo Finance this morning at 10 a.m. Eastern for our interview with Walmart CFO John David Rainey. Let's get to check in on stock futures following the jobs report, following earnings from NVIDIA, following earnings from Walmart. A lot of things to consider this morning. And futures were indicating a higher open because of NVIDIA even before the jobs report. Then it seemed to give some fodder to folks who think that the Fed may cut rates in December, even though we're not going to get another jobs report before then. NASDAQ futures right now pointing to a gain of 2%. So that's an extension of gains that we saw earlier. S&P futures pointing to a gain of more than 1.5%. And Dow futures pointing to an advance of about a percent. Let's dig into our top stories of the day. The delayed September jobs report, offering a read on the labor market, Walmart out with third quarter results, plus NVIDIA's earnings easing bubble concerns. Joining me now, Federal Reserve correspondent Jennifer Schoenberger, senior reporter Brooke De Palma live here in our studio, and tech editor Dan Hell. I'm used to her being at the NASDAQ, but she's not today. So, Jen, we're going to start with you and these jobs numbers, which September looked good, but a surprise revision for August. [00:28:37] Speaker 9: Yeah, bottom line up front, Julie, this definitely helps the hawks on the Open Market Committee. Those who have said that the job market remains in balance, it remains healthy. The more urgent need for attention is inflation. And so all things equal the fact that this is the last major piece of data that the Federal Reserve is going to get before their policy meeting on December 9th and 10th. I think it makes them more inclined to actually hold rates steady. And if you looked at the Fed minutes yesterday, there were many participants, and these word choices matter, versus several participants who thought that, yes, the Fed could continue cutting rates, but they didn't necessarily need to cut again in December. And so this adds fuel to that argument. Taking a look at the actual report, you looked at payroll growth. That rebounded strongly by 116,000 jobs for the month of September versus the expectation for 51,000. And we know that given lower immigration, the so-called break-even rate, that is the number of jobs that need to be added in this economy to hold the unemployment rate steady, has fallen. Many Fed officials see that in the range of anywhere between 30,000 to 50,000. So if we're coming in at 116,000, we are well above that. Even if we were to see revisions downward, that looks healthy. Yes, the unemployment rate ticked up by a tenth of 4.4%, but I don't think that that's going to really catch many Fed officials' attention. Also, in the plus column, you saw average hourly earnings tick up, now 3.8%. That's verging on 4%. That's well above the inflation rate of 3%. And the labor force participation rate also increased a bit. They're inching up. Yes, we did have the revisions. We've seen a lot of volatility in this data. If you look over the summer months coming into the fall, August did tip into negative territory. July was revised upwards. If you go back to June, that was also a negative territory. So negative, positive, negative, positive. Maybe that bodes for another negative or weaker number for November, which will be released nearly a week after the Fed meets. Nevertheless, I think the way that Fed officials are looking at the job picture right now is that it isn't changing that much. Yes, we're seeing volatility, but they still view this as healthy. So perhaps more inclined to hold in December. We'll see how Fed officials react to this. But that's my take on this first blush. [00:31:14] Julie Hyman: Yeah, and the market seems to like it. So it's an interesting read here. Good news is good news, maybe. I mean, wow. That's a take. That's a different take, I guess, Jed. Well, that means no recession. Yeah. That means no recession. Well, there's also, I mean, there's also a different good news is good news situation that's also quite a driver for the market, and that's NVIDIA. Dan Howley, we've been talking for days about the anticipation around the NVIDIA report, which only got more acute because of the sell-off, right? And so it seemed like they came out, delivered, and then some. [00:31:48] Speaker 10: Yeah, they, I mean, and then some is for sure. Jensen Huang basically got on the line and said, let's talk about the AI bubble, guys. Not even, you know, taking the opportunity to let anyone level set after, you know, the numbers came out. He just went for it. But, you know, obviously, they addressed that instantly. They beat on the top and bottom line. Yeah, I don't even know why I'm saying that. And then they raised. But the main thing is that, yeah, he came out and said, there's been a lot of talk about an AI bubble. We don't think there is. Here's why. And he ran through, basically, the investments that they continue to see, the money that those companies continue to generate. He talked about the idea of circular investing and why he says that that gives them a leg up. He says the reason is because it allows them to get more companies using their CUDA software, and then that allows them to continue to have more customers down the line. Remember, CUDA is a way for them to kind of lock in customers over the long term because if you're building your products on CUDA software, well, you're not going to go and use a different kind of card or a chip that doesn't use it. In addition to that, he said that there's continuing high demand for NVIDIA chips. He said that the demand is actually through the roof and that they're seeing a throughput or a through line for $500 billion in sales in calendar year 2026. And so that's a half a trillion dollars that they see themselves selling through their chips. That includes the Vera Rubin. That includes the Blackwell chips. And so, yeah, I mean, basically the bottom line was we're going to keep doing well. We continue to do well. Don't worry about what everyone else is saying. [00:33:26] Julie Hyman: And meanwhile, as the World Street Journal pointed out, the stock has actually gotten cheaper because of the recent sell-off. I mean, the earnings are growing. The stock's been going down. So that means the P.E. looks better. So this is the forward P.E. for the next four quarters for the stock. You see that in the white line here. The three-year average is that top straight line. And then the S&P 500 P.E. is the lower line. So in other words, as you look at this chart, basically it means NVIDIA is below its three-year average in terms of its valuation and is closing the gap with the S&P 500. So if you are a bull on NVIDIA and the argument is the valuation's too high, well, guess what? It's on a relative basis, I guess, to itself and to the S&P. It's not as high as it was. I do want to talk about Walmart as well. We can't forget about Walmart. It's the nation's biggest employer. Obviously, a huge retail behemoth and a great read on consumer spending. So overall, these numbers look pretty good as well. Right, Brooke? They raised their forecast again. [00:34:24] Speaker 11: Exactly. They raised their forecast for the second time this year. And ultimately, Walmart really is a bellwether within the economy. It really gives insight into all these different income cohorts across the economy right now and how they're faring. And keep in mind, here in the U.S., about 60% of Walmart sales is grocery. That's where consumers have really been looking towards. And so it was another strong quarter for the report. As you can see in pre-market trading, the stock is up more than 3%. It was up about 3.5% as this call is still underway. This is now the second time in a row that the company raised their outlook. When you take a look at their quarterly revenue, it was higher than expected. And that was really driven by a few key things. What we saw, particularly here in the U.S., is same sort of sales growth increased more than what Wall Street had expected. And that was really driven by, yet again, that e-commerce efforts that they've been making. Keep in mind, e-commerce growth was up nearly 30% during this quarter. But this is the seventh consecutive quarter where we saw e-commerce growth above 20%. And e-commerce is not just their online sales. That also includes delivery. It also includes that advertising business, Walmart Connect, that they've really been doubling down on. And some key call-outs that we heard on the call. CEO Doug McMillan, who did announce that he was retiring on January 31st of next year. He said on the call that 35% of digital orders were delivered under three hours. They went on to say that Walmart Connect, that key ad business, grew about 33% as they grew advertiser accounts, including their third-party marketplace. And so, really, this combined effort of convenience and that low-price model, that's what's really having Walmart win in this sort of environment. And it's definitely different than what we heard from Target just yesterday. [00:36:04] Julie Hyman: Yeah, it is. And we also got some, you know, when we talk about what kind of read this is on consumer spending, it sounds like it depends a lot on which income cohort you're in. [00:36:13] Speaker 11: Yeah, and what we've seen is Walmart be able to win over all these different income cohorts. But typically, we hear that there's growth across all income cohorts. But they did have a particular call-out within the call just underway, like I had mentioned. And they said when they look at low-income cohort versus middle income versus higher income, they do see a moderation in spending for that low-income cohort. And that's a call-out. He said he doesn't want to sound the alarm or anything, but this is very interesting coming from a retailer that really caters that low-price model. They say that they continue to see higher spend among higher-income cohorts. So, it's just this interesting, you know, dichotomy, this bifurcation that we're seeing, this high-income cohort go more, visit more, spend more at Walmart, where they're seeing that low-income cohort under a bit of pressure. They did say that that's consistent with what we've seen in the macro. They said October wage growth, the disparity in wage growth between these cohorts is as large as it's been in almost a decade. So, definitely, it's interesting to hear America's biggest retailer call out what we've been hearing from other companies as well. [00:37:16] Julie Hyman: Yeah. Brooke, thank you so much. And thanks to Jennifer and Dan. And stay tuned for an interview with Walmart CFO John David Rainey. That's coming up at 1015 Eastern. We'll talk about the company's results. We'll talk about those income cohorts. And we will also talk about Walmart's decision to switch its stock listing from the New York Stock Exchange to the NASDAQ. You don't want to miss that conversation. Coming up next on Morning Brief, we'll bring you today's top trending tickers and count you down to the opening bell. We'll be right back. Now time for some of today's trending tickers. We are watching Abbott, Verizon, and Bath & Body Works. First up, Abbott, the healthcare company, will buy cancer screener Exact Sciences for $21 billion. This marks one of the biggest healthcare acquisitions this year. Exact Sciences produces diagnostic tests, including ColoGuard, which helps screen for colorectal cancer. Abbott, which makes an array of medical devices, nutrition supplements, and other health-related products, said earlier this year it was an interest in expanding into diagnostics. The takeover of Exact Sciences, if completed, would be Abbott's second biggest deal ever and its largest in nearly a decade. Those Exact Sciences shares surging some 18%. Next up is Verizon. The largest U.S. wireless carrier announced it will be cutting more than 13,000 jobs. According to multiple reports, new CEO Dan Schulman sent a memo to employees to announce the cuts. The layoffs will shrink the company's non-union workforce by as much as 20%, and the cuts will extend to employees across all parts of the business. That includes retail workers, customer service reps, and some senior executives. And finally, Bath & Body Works, those shares plunging after it cut its full year outlook and announced a turnaround plan. The transformation plan, named the Consumer First Formula, is projecting $250 million in cost savings over the next two years. Under the plan, Bath & Body Works will exit some categories, including men's grooming and hair care. The stock had fallen 46% this year before today. NVIDIA is climbing after the chip giant's third quarter results wowed Wall Street, but did they alleviate concerns in the AI trade going forward? Joining us now, John Belton, Gabelli Fund's portfolio manager, who holds NVIDIA, among other tech giants in his funds. John, thanks for being here. [00:39:31] Speaker 12: Thank you, Julie. [00:39:32] Julie Hyman: So, everything's okay now? Like, the concerns around the sell-off, valuations, overspending? NVIDIA's made it all fine again, I guess? [00:39:40] Speaker 12: Was everything ever not okay? Fair. No, I think this was a very clean quarter. It's obviously, there's no way to disprove, you know, the skeptics out there that are, that say that, you know, a utility of AI technology may be overstated and spending is going to be overdone. I don't think there's any way to disprove that. But what we definitely got loud and clear last night is the demand environment currently, and at least over the medium term, is extremely robust, broadening customer base, and broadening set of use cases for the technology. So, I think they did a really good job, and the numbers kind of speak for themselves as well. [00:40:22] Julie Hyman: I mean, kind of to your point, though, the problem with this, the whole thesis is it didn't disprove, but nothing has yet entirely proved it yet either, which maybe still gives some ammunition to the critics, right? Yes, you've got more use cases, but in terms of it, you know, the ROI on all of this, that is not quite there yet. [00:40:42] Speaker 12: To be honest, I kind of push back on that. Sure. So, I think if we take kind of the two largest customers for NVIDIA's products, the hyperscalers and the model builders. So, take them one by one. The hyperscalers, these companies are already using AI in their core businesses, and AI is unlocking significant revenue acceleration for these companies. So, the digital media giants like Meta and Alphabet and even Amazon using recommender systems to bolster their revenues, the cloud computing companies, Microsoft being the other one, and then the large language model companies, you know, people talking about lack of ROI on this spend. Well, you take Anthropic, XAI, and OpenAI, and those three companies collectively are generating somewhere in the order of $25, $30 billion of annualized revenue today. And that's up from virtually nothing a year or two years ago. So, I'd actually push back on that. I think the early big investors in AI technology are generating pretty substantial returns on their invested capital. [00:41:47] Julie Hyman: What's the collective spend of OpenAI, Anthropic, et cetera, compared to that revenue? [00:41:52] Speaker 12: They're definitely not profitable right now, but I think a lot of the spend is going ahead of revenue, is going towards kind of new use cases. But I would give them some leeway because they made spend when they were pre-revenue a couple years ago on this infrastructure that has already laid the foundation for multi-tens of billions of dollars of subscription revenue scale. So, sure, they are unprofitable today, but that's no different than any other technology cycle or really any other capex cycle in any other industry historically. [00:42:24] Julie Hyman: So, John, when you're trying to figure out where to put money to work here, you're talking about the biggest, most dominant players right now. Are you also putting money to work in the less dominant players, the more sort of balance sheet challenged players? Do you think that this is something that is going to lift everybody or how do you sort of apply your screens to what is going to be best poised out of all of this? [00:42:49] Speaker 12: Yeah, I think it's important to have bets across different layers of the AI stack. To your question on balance sheet, definitely steering clear of the balance sheet challenged players in this space. And one great thing about the large tech companies, most of the spend is, if not all of the spend, is being financed out of cash flow. And these are companies with really strong balance sheets. So, yeah, I have some plays at kind of the microprocessor, the chip level or chip layer, the data center layer, and at the application layer. Although I think that application layer, it's still earlier to know who's going to emerge as the winners there. [00:43:28] Julie Hyman: Speaking of balance sheet, NVIDIA itself now has, what, annual free cash flow of around $80 billion, right? Which is now larger than some of its customers. What do you think NVIDIA should be doing with that cash? [00:43:39] Speaker 12: I think they should be doing exactly what they've been doing. Invest in R&D, invest in the product roadmap, invest in this kind of annual cadence of new product launches, which I think is making it harder and harder for competitors to compete. Invest in building out the networking suite, which has been working really well. I don't see any need. And then I think, you know, this co-investment strategy that the market seems to be really trying to pick apart, I don't dislike that either. I think it's important to, you know, spread their software ecosystem, spread the CUDA ecosystem as far and wide as possible. And one way to do that is by, you know, aligning incentives with major customers. So I think no change in capital allocation, buy back stock with anything incremental. No need to do large-scale M&A, though. [00:44:27] Julie Hyman: With the declines we've been seeing in NVIDIA, have you guys been adding? [00:44:32] Speaker 12: No, you know, NVIDIA, we like more of a buy and hold strategy. So I think it's a volatile stock. It's an increasingly volatile market. So I think it's hard to be picking kind of local peaks and troughs in this stock. I think, you know, we're just watching the fundamentals. Estimate revisions continue to be positive. We like that. So rather add on strength than try to pick, you know, local bottoms and add on weakness. [00:45:02] Julie Hyman: Fair enough. And, John, finally, you know, obviously you're very positive on this whole AI thesis. What risks are you cognizant of or are you watching at the margins just to keep an eye on? [00:45:14] Speaker 12: Well, I'm positive, but I'm definitely aware that there's a lot of CapEx dollars going into the ground. There are definitely going to be players in this cycle that are caught off sides. There's definitely going to be some players that are spending more recklessly. So I do like to see, you know, real use cases and end users attached to this spend. I like to see real business models on the other side of the spend. So, yeah, I think like any cycle, there is risk of overinvestment. No question about that. This cycle is no different. But so far, I think most, if not all, of the spend from the big players can be justified by fundamentals. [00:45:58] Julie Hyman: John, really appreciate your perspective today. Thanks a lot for joining us. Thank you. [00:46:02] Speaker 12: Thank you. [00:46:03] Julie Hyman: Coming up on Yahoo Finance's opening bid, executive editor Brian Saz is going to be back with that. Saz, what's coming up? [00:46:09] Speaker 2: You're really making me work today here, Julie. I mean, coming on, talking some jobs. And look, the audience wants to hear about NVIDIA. We're going to talk about NVIDIA. I'm wearing NVIDIA green for its stock price and for its corporate logo. But, Julie, I also don't want people to forget about what we just heard from Walmart. Another strong quarter from that company just days ahead of Black Friday. We heard the complete opposite from Target. Horrible quarter, horrible outlook. Walmart's doing it right. [00:46:31] Julie Hyman: All right. Looking forward to hearing more about all of that. All right. That does it for Morning Brief. Opening bid with Saz is next.