A healthy job market is powering a strong U.S. economy based on our analysis of an array of economic indicators and company earnings reports. On Friday, we expect the Bureau of Labor Statistics (BLS) to report an unchanged October unemployment rate of 4.1%. This report holds additional gravity because it is the last major economic indicator before the presidential election and before the Federal Open Market Committee deliberates to set the federal funds rate next Wednesday and Thursday. This nonfarm payrolls data may be a little difficult to interpret. In an October 14 speech at Stanford University, Fed Governor Christopher Waller said the October jobs report "will most likely show a significant but temporary loss of jobs from the two recent hurricanes and the strike at Boeing. I expect these factors may reduce employment growth by more than 100,000 this month, and there may be a small effect on the unemployment rate, but I'm not sure it will be that visible." We expect October nonfarm payrolls to increase by 60,000. This reflects our baseline forecast of 160,000 offset by a temporary reduction of 100,000 jobs. The BLS may provide a breakout on the effects of hurricanes Helene and Milton. We expect that average hours worked ticked down to 34.1 and that growth in average hourly earnings remained at 4.0%. The Fed often turns to its business contacts for additional economic insights. The Beige Book is a mostly qualitative evaluation of economic conditions that is released before FOMC meetings. The labor markets summary in the October 23 report states the following. "On balance, employment increased slightly during this reporting period, with more than half of the Districts reporting slight or modest growth and the remaining Districts reporting little or no change. Many Districts reported low worker turnover, and layoffs reportedly remained limited."

Small- and mid-cap stocks (SMID), despite bursts of outperformance, have underperformed large-caps year to date - as they have over the past five years. But they may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but despite those risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20% of the U.S. stock market's capitalization is comprised of SMID stocks.

Dick's Sporting Goods Inc., headquartered near Pittsburgh, is a full-line sporting goods retailer. The company offers a broad selection of brand name and exclusive-brand sporting goods equipment, apparel and footwear. At the end of FY24, the company operated 724 Dick's stores, and 131 other locations, which include Golf Galaxy stores, as well, Public Lands, and Going Gone! warehouse stores. Dick's stores average 50,000 square feet, and total square footage was approximately 42.7 million at the end of FY24. The company maintains e-commerce sites for Dick's, Field & Stream, and Golf Galaxy. Total FY24 sales were $13 billion, with about 33% from apparel, 26% from footwear, and 38% from hard lines such as sporting goods, fitness, and golf equipment. E-commerce represents approximately 20% of sales. The company's own brands represent approximately 13% of sales. The company's fiscal year ends on the Saturday closest to the last day in January. The current fiscal 2025 ends on February 1, 2025. It is a 52-week fiscal year.

Stocks are struggling to find direction at midday after the major indices hit record highs again yesterday. We still have a few big economic reports coming in this week - GDP tomorrow and favored-inflation indicator PCE on Friday. Wall Street is keeping an eye on this data to get a sense of the health of the U.S. economy. Investors cheered the super-sized rate cut by the Fed last week but they are looking for assurance that the economy is holding up.