Market Beats | US September Jobs Report: Payrolls Rebound but Jobless Rate Hits Four-Year High; Verizon to Lay Off Up to 20% of Non-Union Workforce; BlackRock Waives Fees After Private Credit CLO Fails Key Tests; US Mortgage Rates Rise for a Third Week, Squeezing Affordability; US Stocks See Biggest Intraday Reversal Since April

—— US September Jobs Report: Payrolls Rebound but Jobless Rate Hits Four-Year High; Verizon to Lay Off Up to 20% of Non-Union Workforce; BlackRock Waives Fees After Private Credit CLO Fails Key Tests; US Mortgage Rates Rise for a Third Week, Squeezing Affordability; US Stocks See Biggest Intraday Reversal Since April

1. US September Jobs Report: Payrolls Rebound but Jobless Rate Hits Four-Year High

US nonfarm payrolls rose by 119,000 in September, while August was revised down to show a decline of 4,000 jobs.
The unemployment rate increased to 4.4%, the highest in almost four years, partly due to more people entering the labor force.

The data reflects labor-market conditions before the longest government shutdown on record. At that time, hiring was already weak, with a “low-hire, low-fire” environment. Recently, a wave of layoff announcements has heightened concerns about job security.

September job gains were concentrated in health care and leisure and hospitality. Employment declined in manufacturing, transportation and warehousing, and business services. Private payrolls saw their biggest rise in five months.

This is the last employment report the Federal Reserve will see before its Dec. 9-10 meeting. Officials remain divided over whether slowing labor conditions justify another rate cut. Chair Jerome Powell previously said a December cut is “far from a foregone conclusion,” and minutes from the October meeting showed many policymakers preferred holding rates steady.

Separately, initial jobless claims fell to a three-week low in the week ended Nov. 15, while continuing claims rose to the highest since late 2021, suggesting workers may be having more difficulty finding new jobs.

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2. Verizon to Lay Off Up to 20% of Non-Union Workforce

Verizon announced sweeping layoffs on Thursday that will shrink up to 20% of its non-union workforce — a major step in new CEO Dan Schulman’s turnaround plan.

According to an internal letter seen by Bloomberg, Verizon will begin by cutting more than 13,000 employees. Schulman, named CEO last month after multiple quarters of subscriber losses and weak stock performance, has pledged to make Verizon “simpler, leaner and scrappier.” “Our current cost structure limits our ability to invest meaningfully in our customer value proposition,” he wrote. “We must reorient our entire company around delivering for and delighting our customers.”

The layoffs affect employees at all levels and across all business areas, including retail staff, customer-service reps and some senior executives. Most impacted workers will be off payroll by year-end. More restructuring will follow in the coming weeks, Schulman said.

Verizon employs about 100,000 people nationwide, roughly one-third of whom are represented by CWA and IBEW unions — groups largely shielded from these cuts.

The company, which has large workforce hubs in New Jersey, Texas, Florida and New York, is reevaluating its real-estate footprint and may close some offices. Verizon will convert 179 company-owned stores to franchises and close one New York City location. It will retain 1,300 corporate stores and more than 6,000 franchises.

Verizon will also offer a $20 million fund to help employees retrain, including for roles influenced by the rise of artificial intelligence.

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3. US Stocks’ Longest Slide Since August Is a Dip-Buying Chance, JPMorgan Says

US stocks have posted their longest decline since August, but JPMorgan Chase & Co.’s trading desk says the selloff has created a buying opportunity.

Concerns ranging from the durability of the artificial-intelligence trade to the Federal Reserve’s policy trajectory triggered a four-day drop that erased 3.4% from the S&P 500 Index through Tuesday’s close. Andrew Tyler, head of global market intelligence at JPMorgan, called the decline a “technical washout” that may already have ended.

“Given that there have not been any changes to the fundamental story, nor does our investment hypothesis rely on the Fed easing, we are dip-buyers,” Tyler wrote in a Wednesday note.

Stocks rebounded Wednesday morning as traders awaited earnings from Nvidia Corp., the AI bellwether, and the September nonfarm payrolls report later this week. Tyler said the two events “could set the stage for the next run to or through all-time highs.”

Despite still-rich valuations, the selloff pushed the S&P 500’s 12-month forward price-to-earnings ratio down to 21.9 — the lowest since August. A Deutsche Bank gauge also showed equity positioning slipping back to neutral last week, with discretionary investors turning underweight, suggesting near-term buying capacity.

Still, stretched positioning and elevated valuations have drawn warnings. Goldman Sachs President John Waldron said Wednesday that markets could see more losses. The founder of Algebris Investments urged investors to trim exposure to mega-cap tech, making a bearish case for AI. The S&P 500 is down 3% this month, on track for its worst November since 2008, amid skepticism over whether AI can deliver enough revenue and profit to justify massive infrastructure spending.

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4. BlackRock Waives Fees After Private Credit CLO Fails Key Tests

A portfolio of private credit loans managed by BlackRock Inc. performed so poorly that the firm has waived management fees, an unusual move in the credit world.

The loans were financed through collateralized loan obligations (CLOs), which must pass a series of performance tests. In October, the portfolio’s value fell far enough to breach an over-collateralization (OC) test, meaning the loans weren’t sufficient to cover the CLO’s highest-rated tranches.

To fix the breach, BlackRock deferred fees — including cash flows from the deal’s riskiest tranches — helping cure the October failure, according to a person familiar with the matter.

The affected CLO, BlackRock Baker CLO 2021-1, holds loans to several troubled companies:

• Renovo Home Partners, which filed for bankruptcy this month after BlackRock cut its loan value from par to zero.
• Pluralsight Inc., taken over by private credit lenders last year.
• Astra Acquisition Corp., which entered Chapter 11 in September.

Higher-rated OC test failures are rare and raise broader concerns about the private credit boom, which is now showing stress after years of rapid expansion.

The CLO had already failed its senior OC tests multiple times since last year. Its junior tranches have continuously failed since April 2024, prompting S&P downgrades due to “deteriorated credit quality.”

Launched in late 2021 — at the peak of the private credit frenzy — the CLO reflected a market flush with capital and increasingly lax underwriting. Now, the fallout is emerging alongside other credit blowups such as Tricolor Holdings and First Brands Group, prompting public finger-pointing among Wall Street executives.

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5. US Mortgage Rates Rise for a Third Week, Squeezing Affordability

US mortgage rates climbed for a third straight week, further straining affordability for homebuyers.

The average rate for 30-year fixed mortgages increased to 6.26%, up from 6.24% last week, Freddie Mac said Thursday. A year earlier, the average stood at 6.84%.

The US housing market remains stuck in a holding pattern, burdened by elevated prices and weak demand. Even with ample inventory, buyers have been slow to close deals amid signs of a softening labor market.

“Sticky home prices and elevated mortgage rates continue to challenge buyers, keeping monthly payments well above pre-pandemic norms,” said Hannah Jones, senior economic research analyst at Realtor.com.

The government shutdown has also chilled buyer activity in certain regions. In October, new listings and search activity fell in markets with the largest concentrations of federal workers — including Washington, Virginia Beach and Oklahoma City — according to Realtor.com.

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6. Meta AI Chief Yann LeCun to Leave Company and Launch New Startup

Yann LeCun — an AI pioneer and head of Meta’s AI research lab — plans to leave the company and start a new venture, according to people familiar with the matter.

LeCun, who joined Meta in 2013, is expected to announce his departure as early as this week. Meta plans to partner with his new startup, though details remain under discussion, one person said.

His forthcoming company will focus on his vision for Joint Embedding Predictive Architecture (JEPA) world models — systems trained on visual and sensory data to better predict the physical world. A Meta spokesperson confirmed LeCun is leaving. LeCun did not immediately respond to a request for comment.

LeCun, widely regarded as one of AI’s “godfathers,” has led Meta’s long-term AI research, much of which may not impact consumer products for many years. As Meta shifted resources toward near-term competitive models to counter OpenAI, Google and Anthropic, LeCun found it increasingly difficult to secure internal support.

He has been publicly critical of the industry’s fixation on large language models (LLMs), arguing that LLMs aren’t the path to human-level intelligence — a stance that clashed with Meta’s Llama strategy and its broader pivot toward “superintelligence.” His outspoken views created internal friction, sources said.

When Meta built a new AI lab this summer, spending billions on AI talent, it hired external leadership instead of elevating LeCun. After the underwhelming reception of Llama 4, and Meta’s strategic shift, some employees pushed to reduce LeCun’s public visibility, worrying he wouldn’t stay aligned with the company’s pro-LLM messaging.

His support for open-source AI also conflicts with Meta’s recent move away from openness.

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7. US Stocks See Biggest Intraday Reversal Since April

Wall Street was left stunned Thursday after US stocks staged their most dramatic intraday reversal since April, sending major indexes to the lowest levels in more than two months — with no single, obvious catalyst behind the move.

The Nasdaq-100 Index plunged nearly 5% from its intraday peak, triggering a scramble to explain the selloff. Traders cited various factors:

• Renewed doubts over AI profitability as investors question whether massive AI spending can deliver corresponding revenue and earnings.
• A strong delayed September jobs report, signaling the Federal Reserve may be done cutting rates this year.
• A steep drop in Bitcoin to a six-month low, viewed as a broader risk-off signal.
• Concerns about stretched stock valuations and heightened volatility ahead of Friday’s massive options expiration.

The day began with optimism from Nvidia’s strong earnings and a solid Walmart update, but the mood flipped abruptly. The S&P 500 rose as much as 1.9% early before collapsing to close down 1.6%, erasing more than $2.7 trillion in market value. The VIX closed above 26, its highest since April.

Market giants including Tesla, Alphabet, Apple, Microsoft, Broadcom and Amazon each saw valuation swings exceeding $100 billion.

The tech-focused volatility index, VXN, spiked above 32 ahead of Friday’s expiration of an estimated $3.1 trillion in options contracts — including $1.7 trillion tied to the S&P 500 and $725 billion in single-stock options.

Paramount remains the only party The Nasdaq-100 fell 2.4%, extending its drop from the Oct. 29 record to 7.9%.
to buy the entire company.

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