S&P 500
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A 29,000-job report took an October hike off the table and left the S&P within about 1% of its record. This week brings Fed minutes, PepsiCo and Delta; next week, the banks and September CPI. Here’s the map for the first full week of the fourth quarter.
Last Monday I called Wednesday’s PCE report the October vote, and asked whether the AI leaders could carry a narrow market with a 5.2%-plus 10-year. The answer came in pieces. PCE cooled — core inflation at 3.0% against roughly 3.3% expected — and stocks fell anyway as an upward GDP revision kept yields climbing. Micron beat handily and guided to about $61.5 billion in quarterly revenue, and the stock didn’t rally. The 10-year touched 5.34% on Thursday, its highest since 2002. It took Friday’s jobs report — 29,000 new jobs, unemployment at 4.2% — to break the tension.
The result is a market that lost 0.3% on the week but sits about 1% below its August record, with the Nasdaq a fraction from its own. October hike odds are now below 23%, from 64% a week ago. That changes the question for this week. It is no longer “will the Fed hike in October?” It is “can earnings take over as the market’s driver while the 10-year stays above 5.2%?” Here is how I’m framing it.
The minutes of the Sept. 15–16 meeting, out Wednesday at 2 p.m., are the main macro event of a light week. That meeting produced a unanimous quarter-point hike to 3.75%–4.00% and a dot plot that signaled more to come. What matters now is the conditional language. How many participants tied further hikes to a labor market that, as of Friday, is visibly cooling? Minutes that dwell on inflation persistence — manufacturers’ prices paid just jumped to 77.9 — would push back on the market’s hold bet. Minutes that emphasize downside risks to employment would validate it. Either way, watch the reaction in the 10-year more than in fed funds futures.
The heavy lifting begins next week, but the previews start now. PepsiCo reports Thursday, with analysts looking for about $2.30 a share, flat on the year, on roughly $25 billion of revenue — a read on how consumers are handling $6 diesel and 7% mortgages. Delta follows Friday, where fuel costs and premium travel demand are the questions. Then the big banks open the season in earnest starting Oct. 13, with September CPI landing Oct. 14. Expectations are high: Zacks puts third-quarter S&P 500 earnings growth near 25%, which would be the eighth straight double-digit quarter, with technology earnings up more than 40%. Estimates have been rising into the season. That makes for a solid fundamental backdrop — and a higher bar for beats.
| This week’s calendar | Why it matters |
|---|---|
| Mon · ISM services | Services prices after mfg’s 77.9 |
| Tue · Trade balance | Tariff and energy effects |
| Wed · FOMC minutes (2 p.m.) | How hawkish was September? |
| Thu · PepsiCo, jobless claims | Staples demand; layoffs |
| Fri · Delta, UMich (prelim) | Fuel costs; inflation expectations |
Friday’s bond move deserves a second look. The 10-year fell to 5.17% right after the jobs data and finished at 5.28%, giving back most of its relief by the close. That is the bond market saying the problem isn’t only the Fed. It is a global rout in long-dated government debt: Britain’s 30-year gilt above 6%, France’s 10-year near 5% with record borrowing planned for 2027, and an oil shock that has kept Brent around $100. For equities, the 10-year is the level to watch. A break below Friday’s 5.17% low would be the first real sign the long end is easing; a push through Thursday’s 5.34% would make the earnings story much harder to sell at today’s valuations.
The G7’s agreement on Friday to release up to 100 million barrels of diesel and crude through the International Energy Agency, front-loaded over the first 20 days, should ease some of the fuel pressure that has hammered consumer sentiment. It does not reopen the Strait of Hormuz. Talks with Tehran remain stalled after President Trump rejected Iran’s seven-day proposal, and Iranian officials said over the weekend that the Strait stays shut until their conditions are met. Brent swung between $98 and $103 on Friday alone. Expect energy to keep acting as a volatility source for inflation expectations and for the long end.
The market enters the fourth quarter within reach of its record, with the Fed likely on hold and the long end still near 2002 highs. The cleanest bullish path is minutes that read as patient, a steady 10-year, and early reports from PepsiCo and Delta showing demand holding up under high fuel costs. The bearish path runs through the bond market, not the Fed. Watch the 10-year’s 5.17%–5.34% range, Wednesday’s minutes, and whether small caps can join a rally that has so far been led by the largest names. Don’t chase the record before the long end confirms it.
Friday’s 29,000-job report cut October hike odds below 23% and pulled the S&P within about 1% of its record, but the 10-year still closed at 5.28% after a 5.34% peak, the highest since 2002. This week is light: ISM services today, Fed minutes Wednesday, PepsiCo Thursday and Delta Friday, with the banks and September CPI next week. With hike risk fading, earnings have to carry the market, and the long end remains the constraint. Watch 5.17% and 5.34% on the 10-year.