This week’s roundup covers the U.S. economy and the stock market. The unemployment rate edged up to 4.18%, while the four-week average of initial jobless claims fell to its lowest level in four years and the Atlanta Fed’s GDPNow model is tracking third-quarter growth at 3.6%. Data shared by Visual Capitalist show the U.S. spends about 10.6% of its budget on interest payments, second only to Mexico among developed, market-based economies. On the market side, the bull market that began in October 2022 reaches its four-year anniversary and technology stocks set another record high. Several U.S. exchanges also plan overnight sessions starting December 6 that would bring trading to 23 hours a day. The roundup also looks at bank fundamentals, earnings revisions by sector, global market breadth, and how the S&P 500 has performed around past midterm elections.

 

US Economy

 

The unemployment rate rose by three basis points to 4.18%,

reflecting a 406,000 increase in household employment and a larger 485,000 increase in the size of the labor force. The civilian labor force participation rate ticked up, driven by a rebound in prime-age participation. The underemployment rate (U-6) fell 10 bps to 7.6%.

Factory orders edged up, supported by another increase in orders excluding transportation, which remain at historically elevated levels.

The United States is spending about 10.6% of its budget on interest payments for debt alone – just barely below Mexico’s 10.9% for the highest percentage among the world’s most developed, market-based economies, as the folks at Visual Capitalist recently shared…

 

Ranked graphic of net interest spending in dollars and as a share of government spending across OECD countries, with Mexico at 10.9% and the U.S. at 10.6%, from Visual Capitalist using OECD data.

Source: Visual Capitalist, using OECD data.

 

The ISM Services PMI eased but continued to expand at a robust pace. All components were in expansion. The business activity index moderated. The new orders component also eased but remained solid.

The Backlog of Orders Index rose, indicating that demand is outpacing capacity. Price pressures jumped to their highest level since July 2022. The S&P Global Services PMI was revised up slightly and signaled strong expansion in the sector.

Economic activity has remained resilient despite headwinds from the dollar, oil prices, and bond yields.

Let’s start with some updates on banks.

Fundamentals look robust.

 

Three line charts of U.S. bank Tier 1 capital ratios, loss provisions as a share of risk-weighted assets, and loan-to-deposit ratios since the 1990s, from The Daily Shot.

Source: The Daily Shot.

 

Earnings are at record highs, and returns on equity have been improving. Lending standards are still favorable.

 

Line chart of annualized U.S. bank net operating income since 2001, ending near a record high in 2026, from The Daily Shot.

Source: The Daily Shot.

 

The trade deficit widened, driven by imports climbing to a record high. AI-related capital goods imports remain the star of the show. Redbook same-store retail sales growth picked up in the week ending October 3. The RCM/TIPP Economic Optimism Index improved more than expected. Corporate pricing power has accelerated since mid-2025 while unit labor costs have remained subdued, widening margins and boosting profits.

Here’s a long-term look at the highest and lowest tax brackets.

 

Line chart of the highest and lowest U.S. federal income tax bracket rates since 1913, with the top rate at 37% today, based on U.S. Department of the Treasury data.

Source: U.S. Department of the Treasury, via Bloomberg.

Source: @economics   Read full article

 

Child mortality has declined in all world regions.

 

Line chart of the share of newborns who die before age five by world region from 1950 to 2025, declining in every region, from Our World in Data using UN data.

Source: Our World in Data, UN World Population Prospects (2024).

 

Initial jobless claims edged lower, pulling the four-week moving average down to the lowest level in four years. Continuing claims edged up but remained low. The number of states with initial claims rising over 20% year over year remains low. The GDPNow model is tracking Q3 GDP at 3.6%, down from 3.7% on Tuesday. Underlying domestic demand remains strong. Real final sales to domestic purchasers, which remove volatile inventories and net trade, are solid at 4.3%. Excluding government spending, real final sales to private domestic purchasers are forecast at 4.6%. Healthcare’s contribution to GDP growth has been unusually strong in recent years, partly reflecting an aging population.

There are literally hundreds of products that we use every day that come from that barrel of oil. Plastics, fertilizer and so on. Just look at this chart and get a small idea of all the products that are made from that barrel of oil. This whole process, and especially the refinery complex, is weighing on everything we buy and use.

 

Diagram of how crude oil moves from refining into fuels, petrochemicals, polymers, and fertilizer feedstocks.

 

US Stock Market

 

The technology sector has reached another record high, as has its ratio to the S&P 500. US forward earnings continue to rise across market caps. Bottom-up consensus estimates show S&P 500 EPS growth of 27% year over year in Q3 2026.

Several US exchanges are moving to 23-hour trading, with new overnight sessions from 9 p.m. to 4 a.m. ET scheduled to begin December 6 to capture foreign demand.

Earnings revisions remain robust, particularly in the US and EM.

 

Line chart of forward earnings estimate revisions since 2018 for the U.S., emerging markets, and EAFE, with the U.S. at 133%, from Truist Wealth.

Source: Truist Wealth, via The Daily Shot.

 

How has the S&P 500 performed under different configurations of partisan control?

 

Bar chart of average annual S&P 500 returns since 1933 under six combinations of party control of the presidency and Congress, from Truist Wealth.

Source: Truist Wealth. Data from Truist IAG, Strategas, S&P Dow Jones.

Source: Truist Wealth

 

Global market breadth has deteriorated sharply, with fewer than half of country markets above their 50- and 200-day moving averages. The number of stocks making new lows is surging, with new lows outnumbering new highs for more than a month.

Earnings revision breadth has been the strongest in energy and tech.

 

Bar chart of one-month S&P 500 earnings revision breadth by sector, strongest in energy and information technology, from FactSet and Goldman Sachs Global Investment Research.

Source: FactSet, Goldman Sachs Global Investment Research.

 

Q3 margin estimates have been revised lower in every sector except tech. Last quarter delivered the strongest S&P 500 earnings growth of this century outside postcrisis rebounds, although roughly 22 percentage points came from one-time gains, leaving underlying growth near 28%. Consensus estimates point to a moderation in Q3 earnings growth, with less assistance from unusual gains.

 

Bar chart of quarterly S&P 500 EPS growth from 2022 through the Q4 2026 estimate, separating one-time items from underlying growth, from the iCapital Investment Strategy Group.

Source: iCapital Investment Strategy Group.

Source: iCapital Investment Strategy Group   Read full article

 

Here’s a look at EPS growth by sector or industry.

 

Table of S&P 500 EPS growth by sector and industry from Q2 2025 through the Q3 2026 estimate.

Source: Not shown on image. Confirm before publishing.

 

The current S&P 500 bull market, which began in October 2022, is reaching its four-year anniversary. Of the six previous bull markets that lasted at least four years, five gained further ground in their fifth year, with an average fifth-year return of 12%. The S&P 500 has rallied in the three-month window surrounding midterm elections in 21 of the past 23 election years, with a median gain of 7%; the two exceptions coincided with interest-rate concerns.

 

Great Quotes

 

“The first rule of compounding is to never interrupt it unnecessarily.”

— Charlie Munger

 

Picture of the Week

 

Gwangan Bridge, Busan, South Korea

 

Gwangan Bridge in Busan, South Korea, lit in purple and white at night, with the city skyline behind it and its lights reflected in the water below.

 

All content is the opinion of Brian Decker