S&P 500
7,722.72
wk −0.3%
The 10-year touched 5.34% on Thursday, its highest since 2002, and the S&P drifted lower for three straight sessions. Then September payrolls came in at just 29,000, October hike odds collapsed, and stocks finished the week nearly where they started — with the Nasdaq a step from its record.
For four sessions this looked like the week the bond market finally broke the rally. The S&P 500 fell on Monday, Tuesday and Wednesday, the 10-year Treasury yield touched 5.34% on Thursday morning — its highest level since April 2002 — and the selling in government debt spread from Paris to London to Tokyo. Then, at 8:30 a.m. Friday, the labor market blinked. Employers added just 29,000 jobs in September, unemployment rose to 4.2%, and the odds of an October rate hike fell below one in four.
Stocks took the gift. The S&P rose 0.7% on Friday to 7,722.72 and finished the week down just 0.3%, about 1% below its August record. The Nasdaq gained 1.2% on the day and 0.5% on the week, closing roughly 0.2% shy of its Sept. 22 record. The bond market only half-accepted the premise, though. The 10-year dropped to 5.17% after the report and then climbed back to 5.28% by the close — well off Thursday’s peak, but nowhere near the relief a 29,000 print would normally buy.
Three down days built on rising yields, a flat-looking Thursday that hid a global bond scare, and a Friday rally built on a weak jobs number. The spread between the indexes tells the story: the Dow, heavy with rate-sensitive and cyclical names, lost 1.3%, while the Nasdaq was the only major index to finish the week higher.
The week’s first big test went the bulls’ way — for a few hours. August PCE inflation came in at 3.4% on a headline basis against roughly 3.7% expected, with the core measure at 3.0%, and the 10-year fell as low as 5.20% that morning. But the same day brought an upward revision to second-quarter growth, to a 2.2% annual pace from 1.5%, and the bond market decided a stronger economy outweighed softer prices. The 10-year closed at 5.29%, the 30-year rose to 5.64%, and the Dow shed 444 points as rate-sensitive groups sold off. Traders did cut October hike odds to about 37% — the first crack in the hawkish bet.
After the bell, Micron delivered the quarter the AI trade needed: revenue of $54.2 billion against the roughly $51 billion analysts expected, and guidance for about $61.5 billion next quarter. The company also said it has locked in most of its 2027 high-bandwidth-memory supply at significantly higher prices. The shares failed to rally on Thursday. With expectations this elevated, a beat is the price of admission, not a catalyst.
Overnight the selling went global. The 10-year Treasury touched 5.34%, capping its biggest quarterly rise this century. Britain’s 30-year gilt yield pushed above 6%, its highest since 1998; France’s 10-year came within a whisker of 5% as Paris prepared its 2027 budget; and the euro fell below $1.13 for the first time in 17 months. European stocks dropped hard — 1.7% in London, 1.6% in Paris and 1% in Frankfurt. The U.S. data didn’t help: the ISM manufacturing index held at a healthy 54.5, but its prices-paid gauge jumped to 77.9 from 71.1, and weekly jobless claims fell to just 197,000. Yet by the close the 10-year had eased back below 5.3%, and the S&P managed a 0.2% gain, with Accenture surging more than 15% on strong results and bookings.
| Index | Close | Week | YTD |
|---|---|---|---|
| S&P 500 | 7,722.72 | −0.3% | +12.8% |
| Dow Jones | 51,176.96 | −1.3% | +6.5% |
| Nasdaq Composite | 27,190.86 | +0.5% | +17.0% |
| Russell 2000 | 2,832.90 | −0.2% | +14.1% |
The September jobs report was soft by any measure. Payrolls rose 29,000, roughly a third of the 85,000–90,000 forecasters expected, and the prior two months were revised down by a combined 60,000 — July now shows a loss of 10,000 jobs. Unemployment ticked up to 4.2%. Average hourly earnings rose just 0.1% on the month and 3.0% from a year earlier, slower than the 3.4% pace of headline PCE inflation. For a Fed that hiked three weeks ago because the economy was running hot, it is the first hard evidence pointing the other way.
Markets repriced quickly. CME data showed the probability of an October hike falling below 23%, from 64% a week earlier. Chipmakers led the Nasdaq’s 1.2% gain, Nvidia added 1.3%, and Tesla rose 4.7% after delivering 486,532 vehicles, more than analysts expected. Nike fell 3.6% after its revenue and outlook disappointed, and storage makers Seagate and Western Digital each dropped about 10% even as the rest of the chip complex rallied. Brent crude swung between $98 and $103 before settling near $102, after G7 leaders agreed to release up to 100 million barrels of diesel and other reserves.
The week ended with the S&P about 1% from its August record and the Nasdaq a fraction from its own, so the scoreboard looks calm. The path there was not. A 5.34% 10-year on Thursday showed how quickly a global bond selloff can overwhelm good inflation news, and Friday showed that only genuinely weak data — not merely cooler prices — is enough to pull yields back, and even then only partly. That is an uncomfortable dependency for an equity market: the best macro outcome for stocks right now is an economy that slows, but not too much. Next week is lighter on data, with minutes of the Fed’s September meeting on Wednesday and the first reports of third-quarter earnings season from PepsiCo and Delta.
The S&P slipped 0.3% and the Dow 1.3%, while the Nasdaq rose 0.5% and closed a step from its record. The 10-year hit 5.34% on Thursday — the highest since 2002 — in a global bond rout, before September’s 29,000-job report pushed October hike odds below 23%. Micron’s blowout quarter confirmed the AI demand story without lifting the stock. The lesson of the week: cooler inflation alone didn’t lower yields, and weaker jobs did so only partly. Watch the long end, not just the Fed.