Unemployment Hits 4.6% in the Latest Jobs Report. What This Means for Wall Street

The U.S. economy is continuing to limp along. That's what the latest unemployment report seemed to indicate.

The update was delayed due to the government shutdown, but the numbers showed the labor market continuing to weaken. The unemployment rate rose to 4.6%, its highest level in four years, up from 4.2%, and the economy added only 64,000 jobs. The Bureau of Labor Statistics said there's been little net job growth since April.

There were other concerning signs as well, as the number of people working part-time but looking for full-time work jumped by 909,000 from September to 5.5 million.

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What it means for Wall Street

Investors pay close attention to the labor market report as it's generally considered the most important piece of monthly economic data to come out of the federal government. After all, the labor market is a huge part of the economy, but the relationship between the labor market and the stock market can be complicated.

The jobs report influences the Fed, and stock investors generally prefer for interest rates to fall. A softening labor market tends to push the Fed toward cutting rates, and there are times when Wall Street will cheer a bad jobs report because of that relationship. As of Tuesday afternoon, stocks were heading lower with the S&P 500 (SNPINDEX: ^GSPC) down 0.6%, a sign investors didn't think the numbers were bad enough to encourage more rate cuts and may just see it as another negative data point about the macro-level economy.

In its "dot plot" forecast released last week, the Fed did not see unemployment continuing to rise. In fact, the board of governors called for 2025 to finish with an unemployment rate of 4.5% and for it to edge down to 4.4% by the end of 2026. The forecast showed the Fed expects just one rate cut in 2026, a sign that the central bankers aren't anticipating any kind of economic emergency.

In that light, the November report looks worse than expected, and the unemployment rate could rise into December, which we'll learn in just a few weeks when the December employment report comes out.

Just one data point

Ultimately, the jobs report is just one data point for investors to consider, but it offers one of the best up-to-date measurements of the current economy. Keep your eye on the December report and those coming out in the next few months.

If the unemployment rate continues to rise, the Fed may be forced to get more aggressive with rate cuts. Whether that's a good thing for investors will depend on the status and direction of the job market. Heading into 2026, there's still plenty of uncertainty in the economy and the labor market.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.