All the pieces are now in place for another quarter-point rate hike at the Fed’s December meeting. That doesn’t mean it has to happen.

The US Labor Department delivered a better-than-expected jobs report on Friday, showing 165,000 new nonfarm jobs added in October, or way, way, way higher than the 59,000 that most experts had expected. The beat came just a day after the announcement that weekly jobless claims had fallen to a 57-year low, a week after a stronger than expected GDP report and ahead of Tuesday’s CPI report, aka the last major data dump ahead of next month’s FOMC meeting. Traders upped their odds of a quarter-point hike on Friday to nearly 80% from 66% the day prior. But experts say that new market realities, driven by a brand new political economy, may stop the Fed’s rate-hiking campaign in its tracks, if not in December’s meeting than in January. In other words: AI may just do Kevin Warsh’s job for him.

AI-nflation

Inflation-taming rate hikes tend to go down a lot easier when the economy is experiencing the type of strong growth (3.4% in the third quarter) and tight labor market conditions shown in the recent data releases. The calculus gets a little more complicated when the same factor is driving both growth and inflation. We’re talking about the massive AI build-out, of course, because when aren’t we these days?

Opinions on the AI build-out’s contribution to GDP growth are diverse. On the bullish end, EY-Parthenon Chief Economist Gregory Daco said in an X post recently that private sector AI investments have driven half of US GDP growth since the start of last year. On the far more conservative side of the spectrum, Goldman Sachs Chief Economist Jan Hatzius thinks the build-out’s contribution to GDP growth is basically negligible. Then there’s inflation, which seems to be driven by — and may soon be tamed by — AI:

• While AI may be disinflationary in the long term, the strains of the current expansion appear inflationary, driving up the prices of energy, computer hardware and software. The build-out’s inflationary forces were pegged by some Fed governors as a cause for September’s rate hike, minutes from that month’s meeting revealed.
• On the other hand, last week’s midterm results delivered widespread political opposition that could slow the pace of a build-out, sparking a massive market sell-off of tech stocks last week as Wall Street questioned the proposed scale of the build-out. That means spending could slow, effectively taming a key inflationary force.

“Continued falls in tech stocks and oil prices could eliminate the prospect of an additional hike in early 2027,” Matthew Martin, senior US economist at Oxford Economics, wrote in a note last week.

Now Hiring: The good news for regular old humans? The robots don’t seem to be impacting the labor market yet. The unemployment rate remains at a healthy 4.1%, while the ratio of open job to unemployed person actually increased in September, to 1.06 from 1.02 the previous month. Productivity, meanwhile, increased at an annualized rate of 3.6% in the latest quarter, per the Labor Department. That’s the fastest pace in a year, but low enough for most economists and experts to think AI’s impact on productivity remains marginal.

The years you spent in head-to-toe sweats at the start of this decade, and the COVID pandemic that inspired the fashion choice, are most likely in the back of your mind. But the virus is proving a surprisingly resilient booster for Moderna’s top and bottom line.

Shares in the Massachusetts-based pharmaceutical company rallied a hearty 5.3% on Friday after the vaccine maker revealed it swung to a surprise profit in the third quarter and sharply hiked its 2026 revenue forecast. COVID-19, it turns out, is still a bigger moneymaker than Wall Street expected, and it’s providing Moderna with momentum toward structural profitability that executives hope will include lucrative influenza and cancer treatments.

The Gift of the Jab

Moderna’s stock is up more than 760% in 2026. Yes, the mRNA-based vaccine and therapy developer Moderna, there is not an upstart South Korean memory chip manufacturer that happens to share the same name.

A white-hot rally like this seemed impossible entering the year. While fame and fortune came for Moderna after it developed one of the most effective COVID jabs during the pandemic, it spent the following years watching its revenue nose-dive from a $19.3 billion peak in 2022 to $2 billion last year. Now losing money, executives warned steady profitability wouldn’t return until 2028.

On Friday, the turnaround passed its latest checkup with flying colors. Moderna reported $1.3 billion in revenue in the third quarter, up 29% and well above Wall Street’s $890 million expectation. Along with that came a surprise $162 million profit, up from a $200 million loss in the same period a year ago. The driving force behind this was the “full-year impact” of Moderna’s next-generation mRNA COVID vaccine, approved last year, which showed the virus remains a much more lucrative cash cow than markets anticipated (investors aren’t doctors exhibit 13,535). In fact, almost all of the company’s revenue came from COVID jabs: $780 million in the US and $533 million in international markets. That sets up a very rosy outlook for revenue as Moderna prepares to tackle influenza and melanoma. Its mRNA-based flu shot, called mFLUSIVA, was approved by the FDA in August. In a late-stage trial of over 40,000 adults, it was ​26% more effective than a standard-dose flu vaccine. And intismeran, a cancer vaccine it is developing with Merck, cut the risk of melanoma recurrence or death by 42% compared to Merck’s treatment alone.

• Executives noted that because vaccine contracts are typically signed early in the year, the impact of Moderna’s new mRNA COVID vaccine didn’t show up on the bottom line until this year despite being approved in May 2025. That’s likely to be the same with mFLUSIVA, which missed the window for this year’s flu season but will open up to a multibillion-dollar market opportunity next year.
• Moderna is now targeting 15% to 25% revenue growth this year, leaps and bounds beyond its previous 10% guidance.

Up on the Downside: Skepticism on the street is still strong. Last month, markets punished Moderna for an accidental leak of cancer trial data, even though the information that came out was positive. The average price target for Moderna’s stock, according to a survey of 23 analysts by Zacks Investment Research, is $135.50, which implies a roughly 44% downside in the next 12 months.

The walls are closing in on Zillow, whose shares fell last week as millennials stopped even allowing themselves to dream about that ranch-style three-bedroom they bookmarked at 2 a.m. Monthly users on Zillow’s home-scrolling apps and sites dipped 3% (and visits fell 5%) amid what CEO Jeremy Wacksman called “one of the toughest housing markets in a generation.”

Zillow’s revenue overall climbed 7%, mainly driven by its rentals business, which rose 26%. Revenue from real estate agents helping people buy and sell homes, the biggest piece of its business, slid 4%.

The problem: a housing freeze that’s left a generation of would-be homebuyers resigned to renting.

Starter Home? Forever Home

Mortgage rates were higher than Zillow expected, which meant fewer home sales as sellers stayed locked in golden handcuffs and buyers avoided being shackled to big monthly bills. The average 30-year fixed rate in September topped 7% for the first time since January 2025, according to Freddie Mac. Then the pitch got steeper than an A-frame roof: Rates peaked at 7.4% in mid-October and were still hovering around 7.2% this week.

That’s meant fewer “For Sale” signs on lawns across the US:

• Realtors kissed their commissions goodbye, as pending home sales, or signed contracts on existing homes, fell 7.3% in September from the month before. The telltale sign of housing activity was down more than 11% from a year earlier, per the National Association of Realtors.
• Goldman Sachs expects downward pressure from mortgage rates to keep stifling housing activity into next year. More than 95% of mortgage holders had locked in interest rates lower than the market rate (at the time of the report that was about 7.3%) and nearly two-thirds had rates a full two percentage points lower. Goldman expects home sales to slip further next year.

Silver-Hair Lining: Elder millennials (the ones who grew up with Pogs more so than Pokémon) are trying to buy homes. Key word: trying. The median age of first-time homebuyers has been sitting at a record high of 40 for the last two years. Of first-time homebuyers, one in 10 padded their down payments with inheritance and a quarter with personal gifts or loans. A record 10% skipped the mortgage altogether, fronting all-cash for their house in the year through June, and more than a quarter of them used inheritance. Basically, people are getting creative to buy a house — they aren’t above calling in a favor or using the windfall from a will — signaling pent-up demand for the picket-fenced life.