Wall Street Wants a Cut—The Data Might Deliver

• October WARN notices hit one of the highest levels since COVID.

• The monthly average for 2025 was only surpassed by 2008, 2009, and 2020.

• The prior instances have led to easier monetary policy.

The latest data just landed, and it’s not good news for hiring…

Wall Street’s nerves have been fraying over the Federal Reserve’s interest rate plans. Coming out of the October policy meeting, the bond market was pricing in a 90% chance of a December rate cut. But those odds have since faded. At the start of this week, speculators saw just a 40% chance, before yesterday’s rebound pushed expectations back to nearly even.

The reason for the shift? Recent commentary from Fed officials. Vice Chair Philip Jefferson (dove), St. Louis Fed President Alberto Musalem (hawk), and Boston Fed President Susan Collins (dove) have all leaned toward holding rates steady. Their message: unless the data shows clear labor market weakness, they’d rather wait.

Now that the government shutdown is over, the official stats should start flowing. This Thursday, the U.S. Bureau of Labor Statistics will release September’s nonfarm payrolls. Based on ADP’s numbers, the labor picture likely worsened.

In fact, the Federal Reserve Bank of Cleveland just updated its tally of Worker Adjustment and Retraining Notifications, better known as WARN notices. These are state-by-state filings from companies planning layoffs within 60 days. October’s total hit the second highest level since the pandemic. That should send a clear message to the Fed: the labor market is deteriorating. The message should underscore the need for more policy easing and support a steady rally in the S&P 500 Index.

But don’t take my word for it, let’s look at what the data’s telling us…

WARN notifications are part of a federal law that requires employers to give advance notice before large layoffs or plant closures. The idea is simple: if a company is about to cut jobs on a significant scale, workers and local officials deserve a heads-up. This gives everyone time to prepare—whether that means looking for new work, adjusting budgets, or coordinating support services.

The law applies to businesses with 100 or more full-time employees. If they plan to lay off 50 or more workers at a single site, or shut down operations entirely, they must provide at least 60 days’ written notice. That notice goes to affected employees, state workforce agencies, and local government. It’s not optional. Not complying can lead to penalties, including back pay and fines.

At the state level, some governments go further. They publish WARN notices online, often in real time, giving the public a window into labor market shifts. Now, the notices don’t stop layoffs, but they do add transparency. They’re a signal that change is coming.

It’s often an overlooked but important data source for anyone looking to track employment trends or corporate behavior. A sudden wave of WARN filings might point to deeper restructuring or cost-cutting measures. For investors, these notices can also offer clues about economic growth and the direction of monetary policy.

The Cleveland Fed’s October tally showed companies filed plans to part ways with just over 39,000 employees…

That may not sound huge, but we must put the data in an historical context. As you can see from the chart above, October’s announcements marked the second highest total in the last five years. Only this past May’s filings were worse. They came on the heels of the “Liberation Day” announcement and the consequent recession predictions.

But I wanted to take it a step further. I wanted to look at the monthly WARN notices filed so far this year compared to the tallies before and after the pandemic. I thought that would give us a better since of the job market implications.

Here are the pre-pandemic totals…

And here’s what the post-pandemic numbers look like…  

Through October, companies have announced plans for 280,000 layoffs, matching all of last year. The monthly average is 28,000, making 2025 the fourth worst year for WARN notices in two decades. That’s not noise. It’s a signal. And it’s one the Fed can’t afford to ignore. The last times WARN filings topped October’s total were 2008, 2009, and 2020. Each of those triggered policy easing.

As Chair Jerome Powell, Governor Christopher Waller, and San Francisco Fed President Mary Daly have warned, not acting now could mean larger moves later. Based on the data we just walked through, this time shouldn’t be any different. At the upcoming meeting, policymakers should either strike a dovish tone on the rate path for 2026, cut outright, or do both. Either way, it’s time to send a clear message to Wall Street and Main Street: the Fed stands ready to support hiring and domestic growth.

If you’d like to see how I’d invest, check out the BentPine Growth Portfolio here.

Five Stories Moving the Market:

U.S. President Donald Trump said he thinks he’s identified his choice to be the next chair of the Federal Reserve; the president said he’s likely to move in a traditional direction with his pick – Bloomberg. (Why you should care – the nod toward a traditional choice is likely to favor Governors Chris Waller and Michelle Bowman or former Governor Kevin Warsh, all three having supported lower interest rates)

Microsoft and Nvidia plan to invest in Anthropic under a new tie-up that includes a $30 billion commitment by the Claude maker to use Microsoft's cloud services, the latest high-profile deal binding together major players in the AI industry – Reuters. (Why you should care – these deals continue to signal a race for AI compute power and capacity via data centers and high-powered chip supply) 

Federal Reserve Bank of Richmond President Thomas Barkin said he isn’t willing to specify what he thinks the central bank should do at its next policy meeting until he sees more data on how inflation and unemployment have evolved in recent months – WSJ. (Why you should care – Barkin said recent discussions with business contacts have pointed to continued labor market weakness while consumers are pushing back on price increases)

European Union regulators designated 19 technology companies, including Amazon Web Services, Google Cloud, and Microsoft, as critical third-party computing providers for the bloc's finance industry; under the EU's Digital Operational Resilience Act (DORA), which started being applied in January 2025, three EU-level financial regulators can together name certain technology providers as critical and supervise them directly – Reuters. (Why you should care – the designation could increase oversight and compliance costs for these companies’ European divisions)

Bank of England Chief Economist Huw Pill said that U.K. price pressures are not as strong as headline inflation estimates suggest; Pill stated a raft of one-off impacts on inflation will likely be temporary – Bloomberg. (Why you should care – Pill said the Bank of England should hold off on additional interest rate cuts until its certain high inflation hasn’t changed consumer spending behavior)

Economic Calendar:

Earnings: LOW, NVDA, PANW, TGT, TJX

Japan – Machine Tool Orders for October

U.S. – OPEC Monthly Report (5:00 a.m.)

Eurozone – Eurogroup Meetings (5:00 a.m.)

ECB's Schnabel (Board Member) Speaks (5:45 a.m.)

ECB's De Guindos (Vice President) Speaks (6:40 a.m.)

U.S. - MBA Mortgage Applications (7 a.m.)

BOE’s Pill (Chief Economist) Speaks (7:05 a.m.)

Canada – Building Permits for September (8:30 a.m.)

Fed’s Williams (New York, Voter) Speaks (9:20 a.m.)

Fed’s Waller (Board of Governors, Voter) Speaks (10:20 a.m.)

U.S. - Energy Information Administration Crude Oil Inventory Data (10:30 a.m.)

Fed’s Bostic (Atlanta, Non-voter) Speaks (12:15 p.m.)

Treasury Auctions $16 Billion in 20-Year Bonds (1 p.m.)

Canada – BoC Summary of Deliberations (1:30 p.m.)

Fed’s Collins (Boston, Voter) Speaks (4:00 p.m.)