Zacks Investment Management

In today’s Steady Investor, we break down the signals driving markets this week and how they may influence the Fed and investor positioning. Key themes include:

• Weak Payrolls Boost Rate-Cut Odds
• Services Sector Remains Strong
• New Child Investment Accounts Expand

Weak Payrolls Report Raises Probability of Interest Rate Cut – We won’t see an official U.S. employment report from the Bureau of Labor Statistics until December 16, when the agency will publish November payrolls. In the absence of government data, private reports have filled the gap, and November data looks mixed. According to ADP’s client payroll data, private payrolls fell by 32,000 in November, the weakest monthly read since 2023. The softness was concentrated at smaller firms (under 50 employees), which shed an estimated 120,000 jobs. Larger companies added jobs in the month, but not enough to offset the decline. This ADP report reinforces the notion that hiring momentum cooled through the fall, even as weekly jobless claims haven’t flashed a spike in layoffs. In our view, that mix—slower hiring, limited firing—signals a steady state in the economy but one that gives the Fed an opening to lower rates.

We see a potential December rate cut as more of a tailwind going forward than a catalyst for a fresh rally. Markets have been pricing a high likelihood of an additional move for weeks and, more importantly, are already discounting 2026 earnings and growth. Unless incoming data materially change the trajectory (or communicate something about profits that markets haven’t already inferred), a “just-in-case” cut should be more confirmation than surprise.¹

A New Era for Taxes: What OBBBA Means for Your Finances

With the Fed weighing a potential rate cut and economic data pointing in different directions, the new OBBBA tax framework introduces another set of considerations for investors. Understanding these changes early can help you make more informed decisions about saving, investing, and long-term planning.

Our free, easy-to-reference guide, Tax Guide for 2025 and Beyond³ highlights the law’s most important provisions and what they could mean for your financial strategy. Inside, you’ll find:

• Individuals & Families—Changes to deductions, credits, and income thresholds
• Small Business Owners—Tax incentives related to pass-through income, equipment depreciation, and more
• High-Income Households—Where deduction phaseouts begin and how to plan around those income cliffs
• Seniors & Retirees—Opportunities to reduce taxable income and optimize retirement distributions
• Quick Reference Table—Our high-level overview of key provisions, with phaseout thresholds and planning notes

If you have $500,000 or more to invest, download your free copy today!

Download Our Free Guide, “Tax Guide for 2025 and Beyond^”2

The Federal Funds Effective Rate

Source: Federal Reserve Bank of St. Louis³

The U.S. Services Sector Shows Continued Signs of Strength – While payrolls on balance were mixed in November, the services side of the economy, which accounts for a lion’s share of output, continued to hold firm. The latest ISM survey says US services kept expanding in November, with a headline PMI of 52.6, a notch above October’s 52.4. New orders eased but stayed in growth mode, while business activity quickened and the prices index cooled to its lowest since April. For markets, the read here is that demand is holding up, cost pressures look a bit softer, and firms are meeting workloads without rushing to add headcount. Taken together, this data produces an encouraging mix from an inflation perspective, which again reinforces the idea that a rate cut is almost certainly coming in December.⁴

Michael Dell Makes $6 Billion Donation for Child Investment Accounts – More children are poised to become investors. Last week, Michael and Susan Dell pledged $6.25 billion to widen access to the new federal child-savings program. While the headline number is very big here, and the gift extraordinarily generous, because of its reach to 25 million kids age 10 and under it amounts to $250 of seed money. The gift targets ZIP codes with median income at or below $150,000 and could broaden to 11–12 year-olds if uptake is light. This gift comes in an effort to provide accounts to children not covered by the “Trump accounts” found in the One Big Beautiful Bill Act, which is for children born from January 1, 2025 through December 31, 2028. The U.S. Treasury will seed those accounts with $1,000. Both the ‘Trump Accounts’ and the Dell family gift money are slated to launch in 2026 as custodial, IRA-style vehicles with special rules until age 18. Families, employers, and charities can contribute up to $5,000 annually in after-tax dollars starting in July 2026 (scheduled), with a default investment in a diversified U.S. equity index. For markets, the immediate impact is likely small—seed amounts are modest relative to total market capitalization. But programs like this can incrementally expand household equity ownership and normalize long-horizon saving, which are plusses in our book.⁵

OBBBA and Your Money—What Today’s Changes Mean for Investors – OBBBA represents one of the most significant tax overhauls in years. While its full impact will unfold over time, investors who understand the changes now will be better positioned to adjust their strategies with confidence.

Our free Tax Guide for 2025 and Beyond⁶ breaks down the law’s most important provisions and what they could mean for you. Inside, you’ll find insights on:

• Individuals & Families—Changes to deductions, credits, and income thresholds
• Small Business Owners—Tax incentives related to pass-through income, equipment depreciation, and more
• High-Income Households—Where deduction phaseouts begin and how to plan around those income cliffs
• Seniors & Retirees—Opportunities to reduce taxable income and optimize retirement distributions
• Quick Reference Table—Our high-level overview of key provisions, with phaseout thresholds and planning notes

If you have $500,000 or more to invest, download your free copy today!

Disclosure