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Lowe's was one of the best-performing stocks in the S&P 500 Wednesday after the company posted better-than-expected profits

Key Takeaways

• Lowe's shares rose Wednesday after the home improvement retailer's third-quarter profits topped analysts' estimates, a day after rival Home Depot's profits fell short.
  
• Lowe's CEO Marvin Ellison said comparable sales have been solid to start the current quarter, which JPMorgan analysts said was a notable comment, given how cautious Home Depot executives were yesterday.

Lowe's (LOW) shares surged Wednesday after the home improvement retailer reported profits that topped analysts' expectations, just a day after rival Home Depot's (HD) profits fell short.

Lowe's stock was up over 5% in recent trading, making it one of the best-performing stocks in the S&P 500 Wednesday morning. (Read our daily markets coverage here.) 

The retail giant posted adjusted earnings of $3.06 per share in the third quarter, up from $2.89 the same time last year and well above the analyst consensus compiled by Visible Alpha. Revenue was roughly in line with estimates at $20.81 billion, while comparable sales grew slower than expected at 0.4%.

Lowe's said a jump in sales online and to professional contractors helped drive the results, along with double-digit growth in "home services," in which customers can call on professionals in the company's network to help with tasks such as installing appliances or flooring.

Why This Is Significant

The results from Lowe's, along with rival Home Depot, could reflect broader shifts in the U.S. housing market, along with demand for home improvement supplies and services.

Lowe's CEO Marvin Ellison also said that the current quarter has started with positive comparable sales growth, which he said is notable given Lowe's saw strong sales activity this time last year as hurricanes drove demand.

Lowe's lifted its full-year revenue forecast to $86 billion, up from a range of $84.5 billion to $85.5 billion previously and above the analyst consensus. However, the retailer said it sees adjusted EPS coming in at the lower end of its range, at $12.25 compared to its previous projection of $12.20 to $12.45, citing "ongoing uncertainty in the macroeconomic environment." The company said it now anticipates roughly flat comparable sales, compared to flat to 1% growth previously.

JPMorgan analysts wrote following Lowe's report that Ellison's comments about current-quarter demand are particularly notable considering how cautious Home Depot executives were a day earlier. When rival Home Depot reported earnings yesterday, it pointed to a drop in storm-driven demand and a sluggish housing market for its weaker-than-expected earnings. Home Depot executives also said that homeowners appear to be hiring contractors for fewer projects, and noted that some consumers may be feeling "some fatigue in taking on bigger projects."

Despite Wednesday's gains, Lowe's shares have lost about 7% of their value since the start of this year. Home Depot's stock is down close to 15% for 2025.

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The Cboe Volatility Index, a measure of market anxiety, is near its highest levels since May.

Key Takeaways

• Wall Street is more anxious than it's been since April by some measures, with concerns about an AI bubble encouraging caution heading into Nvidia's quarterly earnings report.
• Individual investor sentiment was at its most negative since September last week, and nearly half of fund managers consider an AI bubble the biggest risk to the stock market.

Nvidia’s quarterly results are almost here, and anxiety is running high.

The Cboe Volatility Index (VIX), known as Wall Street's Fear Index, on Tuesday ended the day just below 25, near its highest level since May, when the market was cooling off from April’s tariff tantrum. The index has risen substantially in the past week after coasting along in the mid-teens throughout the second half of the year. (It was recently a bit below 24; a reading below 20 is generally considered calm.)

And CNN’s Fear & Greed Index, which tracks seven stock-market metrics to gauge the mood on Wall Street, yesterday fell to its lowest level since mid-April. Six of the seven index inputs were flashing “Extreme Fear” on Wednesday morning, with measures of momentum and market breadth having slumped in recent weeks.

Why This Is Important

Wall Street's mood can have as much of an impact on short-term stock performance as the health of the economy or developments with a specific business. Today investors are largely concerned with the quarterly earnings from Nvidia, due after the bell, which could substantially inform how people feel about stocks going forward.

Recent anxiety has centered on AI, with some investors worrying that tech giants are overspending on technology with uncertain commercial prospects. Others argue AI will transform nearly every industry, justifying tech’s massive investments and high stock valuations. 

The AI bubble debate has been playing out for some time, but it intensified this month. Forty-five percent of fund managers surveyed by Bank of America in November said an AI bubble was the biggest tail risk facing the market, up from 33% last month and just over 10% in September. More than half of those surveyed said AI was already in a bubble.

And bullish sentiment among retail investors last week fell to its lowest level since early September, according to the Association of American Individual Investors. Bearish sentiment jumped nearly 13 percentage points, the biggest week-over-week increase since February.

The stock market faces a critical test this afternoon when Nvidia (NVDA) reports earnings. The AI chip giant's quarterly report has become a must-watch event on Wall Street this year, with its results often treated as a proxy for AI demand and a major driver of the AI rally.

AI bubble concerns and some high-profile divestments have dragged down Nvidia's stock this month, but expectations are still high. Analysts predict the huge amounts of capital tech companies are pouring into data centers will underpin another strong quarter for the chipmaker.

News of the day for Nov. 19, 2025

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The release of Nvidia's results is the most highly anticipated event on the earnings reporting calendar.

Stock futures are pointing to a slightly higher open after four straight days of declines for the benchmark S&P 500; Investors are bracing for the latest quarterly earnings report from Nvidia, due after the closing bell Wednesday; Lowe's shares are surging after the home improvement giant reported solid earnings a day after rival Home Depot missed profit estimates; Target shares are lower after the retailer reported a larger drop in sales than analysts had forecast; and the Department of Energy is backing a loan to help Constellation Energy reopen the Three Mile Island nuclear power plant in Pennsylvania. Here's what you need to know today.

Stock Futures Tick Higher as Major Indexes Look to Snap Losing Streaks

Stock futures are slightly higher as investors digest earnings reports from major retailers and prepare for the highly anticipated release of quarterly results from AI chipmaker Nvidia later today. Futures tied to the Dow Jones Industrial Average were up 0.1% recently, while those linked to the benchmark S&P 500 and the tech-heavy Nasdaq added 0.2% and 0.3%, respectively. The Dow and the S&P 500 have closed lower in each of the past four sessions, while the Nasdaq is riding a two-day losing streak as tech stocks have been under pressure. Bitcoin was at $91,500 recently, down from around $93,000 yesterday afternoon but up from an overnight low of near $90,000. Gold futures were up 1.3% at $4,120 an ounce, gaining ground for the first time in five days, while crude oil futures slipped 2.5% to $59.25 per barrel. The yield on the 10-year Treasury note, which affects borrowing costs on a wide range of loans, was little changed, around 4.11%.

Nvidia Set to Release Results After the Closing Bell

Nvidia (NVDA), the chipmaker at the center of the AI boom, is scheduled to release its highly anticipated earnings report after the market closes this afternoon. The report comes as anxiety has built across the market in recent weeks that excitement around AI has created a bubble in the stock market. The chipmaker, which is the world's most valuable company by market capitalization, is expected to report rising revenue and profits. Nvidia shares are expected move significantly after the results are released, which is bound to have a big impact on the broader market and investors in general. The stock, which has lost nearly 15% of its value since hitting an all-time high in late October, was up 1.5% in recent premarket trading.

Lowe's Beats Profit Estimates a Day After Rival Home Depot's Fell Short

Shares of Lowe's Companies (LOW) are rising this morning after the retailer reported strong profits, a day after rival Home Depot's (HD) profits fell short of expectations. Lowe's reported third-quarter earnings per share of $3.06, up from $2.89 a year earlier and topping Wall Street estimates, while sales of $20.81 billion were roughly in line with expectations. The company also lifted its full-year sales outlook to $86 billion, up from $84.5 billion to $85.5 billion, and forecast adjusted earnings per share of $12.25, compared with a previous projection of $12.20 to $12.45. Lowe's credited the shift in guidance to "ongoing uncertainty in the macroeconomic environment," along with including the impact of recently-acquired Foundation Building Materials. Lowe's shares were up more than 5% in recent premarket trading.

Target Sales Come in Below Wall Street Expectations

Target (TGT) shares are losing ground after the retail giant reported revenue for the third quarter that came in below analysts' estimates. The company's revenue fell 1.5% from a year ago to $25.27 billion, while adjusted earnings per share were $1.78, topping the analyst consensus. Comparable store sales fell 3.8% for Target's retail locations, partially offset by a 2.4% gain in comparable sales online. Chief Operating Officer Michael Fiddelke, who is slated to take over as CEO in February, said the quarter was in line with Target's expectations "despite multiple challenges continuing to face our The retailer also narrowed its full-year adjusted EPS forecast to $7.00 to $8.00, versus $7.00 to $9.00 previously. Shares were down 3% in premarket trading.

US Provides Constellation With $1B Loan to Restart Three Mile Island Plant

Shares of Constellation Energy Corp. (CEG) are rising this morning, a day after the Department of Energy announced its support for a deal involving the power provider. The DOE said Tuesday that it is providing Constellation with a $1 billion loan to help the company restart activity at the Three Mile Island nuclear power facility in Pennsylvania. Last year, Constellation and tech giant Microsoft (MSFT) announced a deal that would see Constellation restart the Three Mile Island Unit 1 nuclear reactor and provide its power to run some of Microsoft's data centers in the area. Constellation shares were up more than 2% recently.

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What Nvidia CEO Jensen Huang has to say Wednesday about the chipmaker's outlook could have big implications for the broader market

Key Takeaways

• Nvidia's size and influence on the broader market mean its results, due after Wednesday's closing bell, will likely affect a wide range of investors.
• In recent quarters, the chipmaker's quarterly update has tended to be a sell-the-news event in the short term, but Nvidia's stock has climbed in the months following the results.

A lot is at stake when the world's most valuable public company reports earnings Wednesday.

Nvidia's (NVDA) latest quarterly financial update, due after the closing bell, is being widely viewed as the biggest event of this earnings season. It could have wide-reaching implications for the AI trade and the broader stock market.

A strong showing from the chipmaker at the heart of the AI boom, viewed as a bellwether for the industry, could prove just what the market needs to revive confidence in the AI rally that boosted shares of Nvidia, its partners, and stocks across industries this year, pushing the major indexes to a series of record highs.

However, with expectations riding high and signs investors may be more difficult to impress amid persistent worries that elevated stock valuations have created an AI bubble, the stock could be primed for punishment if Nvidia's results are anything less than stellar.

Why This Matters for Investors

Nvidia's quarterly results and outlook could sway sentiment surrounding a host of stocks tied to the AI boom. The chipmaker's outsized influence on major indexes and funds that track them also means a big move in its stock would affect a wide range of investors.

With the chipmaker facing a particularly challenging setup heading into Wednesday night's event, some investors are already bracing for enhanced volatility in its wake. Options pricing suggests traders see shares swinging roughly 7% in either direction by the end of the week.

Nvidia's outsized influence on major indexes—with a market capitalization of around $4.4 trillion, the stock accounts for about 8% of the S&P 500—also means a big move in its stock would impact the market broadly. And if Nvidia's shares soar or slump, those of its partners and others related to AI likely will too.

Even if you don’t hold Nvidia stock directly, a big share price move could affect you if you hold money in broad market index funds through brokerage accounts or tax-advantaged retirement accounts such as a 401(k) or IRA. Options pricing indicates traders expect the S&P 500 could move close to 2% in either direction by the end of the week, affecting a wide swath of investors and savers.

In recent quarters, the AI chipmaker's quarterly report has tended to be a sell-the-news event, with the stock finishing the week of its earning lower than its levels heading into the event in three of the last four quarters, despite strong results. However, Nvidia's stock has typically picked up in the months that followed.

The shares, which slid nearly 3% Tuesday amid broader losses, have still added over one-third of their value this year so far. Most Wall Street analysts surveyed by Visible Alpha believe the stock has room to rise.

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Concern about the payoff of companies' AI investors has weighed on tech shares lately.

Key Takeaways

• The firm has lowered its rating for the pair of tech giants after years of maintaining an "above-consensus" bullish stance.
• "Gen-AI is not the new cloud 1.0," Rothschild & Co Redburn's analyst said.

Some of the firms in the Magnificent 7 are starting to look a bit less magnificent.

Rothschild & Co Redburn on Tuesday downgraded both Amazon (AMZN) and Microsoft (MSFT) to neutral from buy rating, a measure of cold water on backers of the AI rally—and on the shares, which are broadly beloved by Wall Street analysts. "We no longer see a bull case," analyst Alex Haissl wrote. Shares of Microsoft and Amazon were down 2.7% and 4.4%, respectively, on a down day for markets.

The AI rally, which has driven broad market indexes to record highs, had already started to hit the skids. Between concerns about valuations, comparisons to the dotcom bubble, high-profile stock sales and earnings reports showing capital investments the payoff of which investors now see as less certain, enthusiasm has sputtered. Now, a sobering report on two of main characters in the AI-narrative lands right before Nvidia's (NVDA) earnings, expected tomorrow.

Key Takeaways

There's still plenty of bullish energy around AI, but investors are increasingly asking questions about whether the technology can lead to revenue that justifies the spending needed to build out the technology. That's a major reason for the pressure on tech stocks lately.

The gist of the 61-page report is that generative AI costs more to develop than it generates revenue. Though the new technology is often compared to cloud computing in its early days, Haissl said that the capital intensity needed to develop Gen-AI is nearly three times higher, which would require prices to "rise materially" to make financial sense. Meanwhile, he argues, the effect of AI business on big cloud-computing business growth—upon which Microsoft and Amazon both heavily rely—has been overstated.

There is "no credible path back to 'Cloud 1.0' economics," Haissl said. "The market, however, still prices in that outcome, implying returns we believe are no longer achievable—and this misalignment underpins our more cautious stance."

The analyst said Amazon's AWS is better-positioned than Microsoft's Azure in terms of capturing value, but in order for him to take a more positive view on the pair, they each would have to show evidence that they are producing higher growth over a sustained period of time and reducing build costs.

The downgrade on Amazon and Microsoft follows years of the shop maintaining an "above-consensus bullish view" on them. Price targets for the stocks are $250, and $500, respectively, not far off the levels where they closed Tuesday.

Take A Number: A Striking Figure In Economic News Today

Investopedia / Elizabeth Guevara

New jobless claims data resumed this week after the shutdown ended.

Key Takeaways

• Workers filed 232,000 unemployment claims the week ending Oct. 18, the Department of Labor said.
  
• The number was unusual mainly because we weren't supposed to see it: the department said the release, the first after the government shutdown ended, was a mistake.
  

A week in late October, 232,000 people filed for unemployment, an uptick from 219,000 in late September and a remarkable figure for the simple fact that we know what it is.

That's according to the Department of Labor, which released the figure for unemployment claims made the week of Oct. 18 on a website tracking historical data Tuesday. It was the first new data posted about jobless claims since the end of the 43-day government shutdown last week.

The release took place at an unusual time: usually, the department releases that information on Thursdays. Tuesday's release was a mistake, the department said, according to Bloomberg.

What This Means For The Economy

The jobless claims figure sheds light on economic trends that were blacked out during the government shutdown last month.

The number of jobless claims was in line with recent months and didn't raise any red flags for economists about the health of the labor market.

Forecasters expect a separate, long-delayed employment report due to be released on Thursday from the Bureau of Labor Statistics to show that the economy added a modest number of jobs in September. Job growth has slowed dramatically since the summer due to uncertainty about tariffs and President Donald Trump's crackdown on immigration, among other factors.

"The overall picture is one of a labor market that is deteriorating but not falling into recession,"  Dean Baker, senior economist at the Center for Economic and Policy Research think tank, wrote in a commentary.

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The hedge fund founded by Peter Thiel (pictured) divested from Nvidia last quarter.

Key Takeaways

• Thiel Marco, the hedge fund run by PayPal and Palantir founder Peter Thiel, sold its entire stake in Nvidia last quarter, joining a list of investors who've cashed out of the AI darling in recent months.
• AI sentiment has deteriorated in recent weeks amid debates about elevated stock valuations, unorthodox deals between suppliers and customers, and doubts about the return on AI investments.

While everybody is watching for Nvidia’s earnings report tomorrow, a few big investors have already taken their chips off the table.

Thiel Macro, tech titan Peter Thiel’s hedge fund, revealed in a regulatory filing late last week that it sold its entire stake in the AI bellwether during the third quarter. The 537,742 shares the firm held heading into the quarter would have been worth approximately $100 million at the end of September.

While people may sell assets for all sorts of reasons, Thiel joins a growing list of heavy hitters whose Nvidia (NVDA) moves have lately raised eyebrows on Wall Street. Japanese investment firm SoftBank revealed last week that it sold its entire Nvidia stake in October, raising about $5.8 billion. (Executives said the position was liquidated to fund investments in another AI darling, OpenAI.)

Why This Is Important

Nvidia, which dominates the market for accelerated computing chips, has benefited more concretely from the AI investment boom than nearly any other U.S. company. An increasingly bearish outlook for its stock could spell trouble for more speculative AI bets. Some investors aren't waiting for its next earnings report to make that call.

Others have outright bet against Nvidia. Scion Asset Management, run by Michael Burry, the hedge fund manager of “The Big Short” fame, revealed earlier this month that it sold short Nvidia shares valued at $186 million in the third quarter. (Scion also had a short bet against Palantir (PLTR), the data analytics firm Thiel founded in 2003, valued at more than $900 million at the end of the quarter.)

Some on Wall Street are increasingly worried that the AI boom is actually an AI bubble. They point to elevated stock valuations, uncertainty about AI's revenue potential, and a series of circular deals between vendors and customers as causes for concern. AI bulls contend that valuations are modest compared with the Dotcom Bubble, to which the current investment cycle is frequently compared, and remind skeptics that AI investment is being driven by hugely profitable tech businesses.

The bubble debate has weighed on AI sentiment and stocks heading into one of Wall Street's most important recurring events: Nvidia's quarterly earnings report, scheduled for Wednesday afternoon.

High-flying AI stocks like Palantir, Applovin (APP), and Super Micro Computer (SMCI) are among the S&P 500's worst performers over the past week. Shares of Nvidia and Microsoft (MSFT) fell Tuesday even after they announced a cloud computing deal with startup Anthropic, the kind of tie-up that months ago might have been sure to boost socks.

Nvidia shares have fallen more than 10% since late October, when it became the first company in history to be worth $5 trillion. Nonetheless, Wall Street's expectations are still high heading into Wednesday's report, with analysts predicting big tech's aggressive investments will drive a solid quarter for the chipmaker.

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Home Depot was the worst-performing stock in the S&P 500 Tuesday

Key Takeaways

• A home improvement retailer faced pressure on Tuesday, Nov. 18, 2025, as housing market headwinds weighed on earnings, while a medical device maker benefitted from strong demand.
  
• Home Depot reported lower-than-expected quarterly earnings and trimmed its full-year forecast, sending its shares lower.
  
• Medtronic shares advanced after the maker of medical devices surpassed quarterly estimates, highlighting strong demand across its end markets.
  

Shares of a major home improvement retailer lost ground after it missed quarterly profit forecasts, indicating homeowners are putting off remodeling projects amid economic uncertainty. Meanwhile, strong demand and procedure volumes helped drive a strong earnings report for a medical device company, and its shares advanced.

Major U.S. equities indexes dropped for the second straight day ahead of several high-profile earnings reports and the release of delayed jobs data due later this week. The S&P 500 dropped 0.8%, the Dow slid 1.1%, and the Nasdaq lost 1.2%. Click here for more reporting from Investopedia on Tuesday's market moves.

Home Depot (HD) stock tumbled 6% to log the worst performance in the S&P 500 after the home improvement retailer missed forecasts with its third-quarter earnings, noting that a lack of storms during the period weighed on its performance. The company also lowered its full-year profit forecast, citing persistent headwinds in the housing market and suggested that homeowners are pushing back remodeling projects amid broader economic uncertainty.

Concerns about high valuations for companies in the artificial intelligence space weighed on the tech sector. Shares of Western Digital (WDC), the hard disk drive maker that has drawn attention from investors given its opportunity to help satiate AI's massive data storage needs, fell 5.9% Tuesday. Shares of memory chipmaker Micron Technology (MU) lost 5.6%.

Amazon (AMZN) and Microsoft (MSFT) shares slipped 4.4% and 2.7%, respectively, as regulators in the European Union announced that they were launching investigations into cloud computing services offered by the two tech giants.

The move lower for Microsoft stock also came as the software giant announced a partnership with AI startup Anthropic. Chipmaker Nvidia (NVDA) announced a deal with Anthropic as well. Nvidia shares slid close to 3% Tuesday ahead of the chipmaker's highly anticipated earnings release Wednesday afternoon.

Medtronic (MDT) stock advanced about 5% after the medical device maker topped analysts' estimates with its fiscal second-quarter sales and adjusted profit. The manufacturer of pacemakers and other cardiovascular devices also lifted its full-year forecast for organic revenue growth, highlighting strong procedure volumes and a positive demand picture across its end markets.

Merck (MRK) announced positive results from a Phase 2 trial of a key heart treatment, and shares of the pharmaceutical company jumped nearly 4%. In the study, Merck's Winrevair met its primary endpoints in helping patients with certain heart conditions reduce pulmonary hypertension, or high blood pressure in the blood vessels that supply the lungs.

Hu Yousong / Xinhua via Getty Images

Federal Reserve Chair Jerome Powell speaks after October's Fed meeting. Officials remain divided over December’s rate decision.

Key Takeaways

• The Federal Reserve's 12-member policy committee is divided about whether to cut interest rates at its next meeting in December.
  
• A group of "hawks" within the committee favors keeping rates higher for longer to fight inflation, while several "doves" want to cut rates sharply to boost hiring.
  

What should the Fed do to fight high inflation while preventing the job market from collapsing? Ask its 12 leaders and get 12 different answers.

It's up in the air whether the Fed will lower its key interest rate for a third time in as many meetings in December. The chances of a rate cut were hovering around 50% Tuesday, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Traders aren't sure how to feel about the next meeting because members of the policy committee themselves are sharply divided. Some believe the Fed should hold rates higher for longer to combat inflation, while others argue that the deteriorating labor market requires an immediate boost from lower rates.

What This Means For The Economy

The strongly differing opinions of the FOMC members reflect the economy's dicey position caught between high inflation and slowing job creation.

The divide stems from the Fed's dilemma: its dual mandate from Congress is to keep inflation low and employment high. Right now, both are heading in the wrong direction, according to recent data, pulling the Fed's decision-making in opposite directions.

Here's where each of the 12 voting members of the committee stands, according to recent public comments:

The Doves

Stephen Miran, Governor

Miran has stood out from his fellow FOMC members by consistently advocating for steep rate cuts, and contending that inflation will soon fall sharply. He repeated those arguments last week in an appearance on CNBC, where he said a cut of half a percentage point would be "appropriate" in December, and that the Fed should cut it by "at least" a quarter-point.

Christopher Waller, Governor

Waller said he was more concerned about the health of the labor market than inflation, and that he favored additional rate cuts, regardless of what the highly anticipated and long-delayed Bureau of Labor Statistics jobs report for September says when it is released on Thursday.

"I am not worried about inflation accelerating or inflation expectations rising significantly," he said Monday at an economic conference in London, according to prepared remarks. "My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order. I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers."

Michelle Bowman, Governor

Bowman's recent public comments have focused on banking supervision rather than monetary policy. Before that, however, she strongly advocated for steep and swift rate cuts.

"It is time for the committee to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility," she said in a speech in September following the FOMC's decision to cut rates for the first time in 2025, according to prepared remarks. "We are at serious risk of already being behind the curve in addressing deteriorating labor market conditions."

Bowman and Waller voted for a cut as early as July, dissenting against the majority.

The Hawks

Jeffrey Schmid, President of the Kansas City Fed

Schmid said he was against further rate cuts, contending that they would not help the labor market and would instead stoke inflation.

 "I do not think further cuts in interest rates will do much to patch over any cracks in the labor market—stresses that more likely than not arise from structural changes in technology and immigration policy," he said at an event in Denver last week.

Susan Collins, President of the Boston Fed

Collins said she favors keeping interest rates steady to combat inflation that remains above 2%.

"Absent evidence of a notable labor-market deterioration, I would be hesitant to ease policy further … it seems prudent to ensure that inflation is durably on a trajectory back to 2% before making any further adjustments to our policy stance," she said at a banking conference in Boston last week, according to prepared remarks.

Somewhere Inbetween

Jerome Powell, Fed Chair

The most influential member of the FOMC, Fed Chair Jerome Powell, said an interest rate cut is "far from guaranteed" last month at a post-meeting press conference.

Powell noted the strong differing opinions among policymakers and emphasized the uncertainty the Fed is facing, given the lack of economic data due to the government shutdown.

"A further reduction in the policy rate at the December meeting is not a foregone conclusion—far from it," he said. "Policy is not on a preset course."

John C. Williams, President of the New York Fed

In recent public remarks, Williams did not commit to cutting rates and emphasized the need to maintain a balance between the Fed's goals of keeping inflation low and employment high.

"It’s important to get inflation back to 2% on a sustained basis, but do it in a way that doesn’t unduly harm achievement of maximum employment," he told The Financial Times on Nov. 10.

Michael S. Barr, Governor

The Fed needs to support the job market while getting inflation down to the target of a 2% annual rate, Barr said in an interview with Fed Communities.

"We made a lot of progress on that, but we still have some work to do," he said.

Ha also noted the economy is currently working at two speeds: the wealthy are doing well, but people with lower incomes are falling behind. He also acknowledged that people are worried about the employment situation.

"We have to pay careful attention to making sure that the labor market is solid," he said.

Lisa Cook, Governor

Cook said earlier this month she had not made up her mind about a rate cut in December.

"I determine my monetary policy stance each meeting based on the incoming data from a wide variety of sources, the evolution of my outlook, and the balance of risks," she said in an interview with the Brookings Institution think tank in Washington. "Every meeting, including December's, is a live meeting."

Austan Goolsbee, President of the Chicago Fed

Goolsbee favors a cautious approach to additional rate cuts, especially given the Fed's limited data due to the government shutdown, which he likened to driving in fog.

"When it's foggy, let's just be a little careful and slow down," he said in an interview on CNBC earlier this month.

Philip Jefferson, Governor

Jefferson said he supported the decision in October to cut rates because the labor market had shown signs of weakening, and that he favored a cautious approach going forward.

"The current policy stance is still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy," he said in a speech at the Kansas City Fed. "The evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate."

Alberto Musalem, President of the St. Louis Fed

Musalem, speaking at a fireside chat event in Indiana, said the Fed should be cautious about further rate cuts and should "lean against" inflation.

"We need to proceed and tread with caution, because I think there’s limited room for further easing without monetary policy becoming overly accommodative,” he said.

Elijah Nouvelage / Bloomberg via Getty Images

The Fed has been lowering interest rates to counter a cooling labor market. Will it work?

Key Takeaways

• The Federal Reserve has been cutting interest rates to boost the job market.
  
• Many of the labor market's persistent problems, such as a shrinking workforce and the rise of AI, cannot be solved by rate cuts.
  

The Federal Reserve's current round of interest rate cuts is meant to boost hiring, but experts say they may not be able to fix what's wrong with the job market.

The Federal Reserve officials cut their benchmark interest rate by a quarter of a percentage point at each of their last two meetings, and there's a chance they'll do it again when they next meet in December. Central bankers hope lowering borrowing costs will gas up the economy just enough to prevent the recent job market slowdown from worsening into a surge of unemployment.

Fed officials are divided about whether to cut rates to boost the job market or to keep them higher for longer to restrain inflation that has been above the Fed's target of a 2% annual rate for five years. And some experts are skeptical that lower interest rates will even help the job market all that much.

"I don't see the types of weaknesses that interest rate cuts are really going to help," said Martin Eichenbaum, professor of economics at Northwestern University.

Why This Matters

U.S. policymakers are trying to do what they can to prevent the economy from tipping into a recession, and interest rates are one of the few levers they have control over.

The Jobs Slowdown

The rate cuts are mainly in response to an alarming slowdown in job creation. The U.S. economy added 22,000 jobs in August, the last month of available data, and actually lost jobs in June for the first time in four years. Before that, monthly job creation in the six figures was the norm.

Despite the slowdown, however, the unemployment rate has stayed low because fewer people are entering the workforce. Fewer new jobs and fewer new job-seekers have left the labor market in what Fed Chair Jerome Powell described as a "curious balance."

Fed officials worry that the balance could quickly topple into a less curious and more economically painful wave of layoffs. The labor force participation rate was at 62.3% in August, a full percentage point below its pre-pandemic level.

Several major factors behind the slowdown in both supply and demand for labor have nothing to do with interest rates, including the nation's aging population, President Donald Trump's crackdown on immigration, the adoption of artificial intelligence technology, and uncertainty about tariffs and trade policy.

Rate Cuts And Car Shopping

The Fed is following a tried-and-true playbook for rescuing the economy from an impending slowdown.

The central bank is lowering the fed funds rate, which controls the interest rate on loans that banks make to one another. That rate, in turn, influences borrowing costs for credit cards, car loans, and other forms of credit. Lower rates encourage money to flow through the economy, as people can afford more goods and services. Companies respond to increased demand by expanding production, which in turn requires hiring more workers.

"Citizen Joe goes in to buy a car, and he finds out his or her payments are going to be a lot lower. Well, he or she is much more likely to buy that car," Eichenbaum said. "That's going to boost demand for cars for production, and folks are going to be hired in the auto industry, and then they start to spend, so you can see a cycle."

Household Strain

That's exactly why Fed Governor Christoper Waller said he supports a rate cut in December. In a speech this week at an economic conference in London, Waller said high borrowing costs were preventing low- and middle-income families from making large purchases, such as cars.

"Most households are facing strains in purchasing large assets, such as housing and autos, in part because of the expense," he said. "I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers. A December cut will provide additional insurance against an acceleration in the weakening of the labor market."

In the most recent economic downturn caused by the pandemic, the Fed cut rates to near zero to boost the economy, and it worked: the job market came back with a vengeance after the wave of layoffs in 2020.

But what if that cycle is short-circuited because there are fewer people entering the workforce?

"Car manufacturers, they can say, 'Oh, we're selling more stuff. Let's hire some more people.' What if there's nobody decent to hire?" Eichenbaum said. "Suppose you can't get a particularly good, skilled blue-collar guy to work in your factory because there are none of them left. Well, then you just kind of raise the price of cars, and people bid with each other to get those scarce cars."

That's how lower rates could produce inflation instead of jobs.

Fed officials are aware of the risk, and a contingent of the Federal Open Market Committee, the Fed's policymaking body, has argued against cutting rates for that reason.

It's unclear which side will prevail. On Tuesday, financial markets were pricing in a 51% chance of a December rate cut, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

"I think it's a tough case to make an overwhelming argument for lower interest rates now, and I think that's partly why they're so divided," Eichenbaum said.