Treasury Official Joe Lavorgna's 2026 Labor Market Outlook & Rate Cut Implications

U.S. equity indices have posted solid gains over the past 60 days, with the NASDAQ leading (+7.29%) amid growing expectations for Federal Reserve rate cuts. Healthcare sectors outperformed today (+1.44%) while Real Estate lagged (-1.49%). Key themes include Treasury official Joe Lavorgna’s optimism on a 2026 labor market turnaround and market pricing of an 80% probability of Fed rate cuts in the next three meetings.

• S&P 500 (^GSPC):
  $6445.82 → $6765.89 (+4.97%), above 20/50-day moving averages [0]
• NASDAQ Composite (^IXIC):
  $21461.63 → $23025.59 (+7.29%), near 20-day MA [0]
• Dow Jones (^DJI):
  $45309.43 → $47112.46 (+3.98%) [0]
• Russell 2000 (^RUT):
  $2352.37 → $2465.98 (+4.83%) [0]

• Leaders:
  Healthcare (+1.44%), Industrials (+1.26%), Consumer Cyclical (+1.23%) [0]
• Laggards:
  Real Estate (-1.49%), Utilities (-0.36%), Basic Materials (-0.64%) [0]

• JPMorgan Chase (JPM):
  $303.00 (+1.68% after-hours) with volume of 6.73M [0]

1. Lavorgna’s Labor Market Outlook:
   Treasury official Joe Lavorgna stated confidence in a 2026 labor market turnaround and discussed rate cut prospects during a CNBC interview [1].
2. Fed Rate Cut Expectations:
   Prediction markets assign an 80% chance of a 25bp Fed rate cut in the next three meetings as inflation drifts toward target [2].
3. Weakening Private Sector Jobs:
   Private employers shed an average of 13,500 jobs/week in October-November, up from 2,500 jobs/week in prior periods [3].
4. Sector Rotation:
   Defensive sectors (Healthcare) gained amid rate cut hopes, while interest-sensitive Real Estate declined due to lingering rate uncertainty [0].

• JPMorgan Chase (JPM):
  After-hours gain of 1.68% reflects positive sentiment toward financials from potential rate cuts [0].
• Healthcare Sector:
  Top-performing sector today, driven by defensive positioning and rate cut expectations [0].
• Real Estate Sector:
  Worst performer, as higher-for-longer rate concerns persist despite cut expectations [0].

• Upcoming Catalysts:
  Fed meetings (next three), monthly jobs reports, and inflation data to validate rate cut timing [2].
• Technical Levels:
  Monitor S&P 500 support at 6748 (20-day MA) and resistance at 6920 (60-day high) [0].
• Risks:
  Fiscal-monetary policy misalignment could complicate the inflation fight, per market analysts [2].

[0] Ginlix Analytical Database
[1] YouTube: “Very confident labor market will turn around in 2026, says Treasury official Joe Lavorgna” (https://www.youtube.com/watch?v=sdqefeOUJQI)
[2] Forbes: “Fed Bombshell Coming? Markets Flash A Wild Signal On Rate Cuts” (https://www.forbes.com/sites/robertdaugherty/2025/11/25/fed-bombshell-coming-markets-flash-a-wild-signal-on-rate-cuts/)
[3] Forbes: “Private Job Losses Sped Up This Month As Labor Market Declines” (https://www.forbes.com/sites/martinacastellanos/2025/11/25/private-job-losses-sped-up-this-month-as-labor-market-declines/)
[4] Investopedia: “A December Fed Cut Is in Play Again—But What Would It Really Mean For Mortgage Rates” (https://www.investopedia.com/a-december-fed-cut-is-in-play-again-but-what-would-it-really-mean-for-mortgage-rates-11856959/)