U.S. equity markets navigated early-week volatility and multi-decade highs in bond yields before staging a powerful Friday rally. Will moderating labor demand and cooling inflation readings provide the Federal Reserve latitude to pause further interest rate increases this month?
Monday S&P 500 0.77% | NASDAQ 0.92%
Equities opened the trading week on the defensive as month-end portfolio rebalancing and elevated bond yields prompted broad-based profit-taking. High-valuation technology shares and rate-sensitive dividend sectors experienced selling pressure as the 10-year Treasury yield hovered near multi-year peaks. Investors remained cautious ahead of a catalyst-dense economic calendar featuring inflation gauges and employment.
Tuesday S&P 500 0.17% | NASDAQ 0.09%
Markets traded in a narrow, subdued range on Tuesday as market participants digested August JOLTS job openings and consumer confidence data. While technology mega-caps showed modest underlying resilience, defensive utilities and consumer staples lagged amidst persistent yield friction. Trading volumes moderated as investors awaited mid-week Core PCE inflation numbers.
Wednesday S&P 500 0.25% | NASDAQ 0.24%
Major indices diverged to close out in the third quarter as the August Core PCE Price Index came below expectations at +0.2% month over month1 . The inflation print supported growth and semiconductor equities, allowing the Nasdaq to finish in the green. However, broader market averages softened into the closing bell as cyclical industrials and materials weighed on the S&P 500.
Thursday S&P 500 0.19% | NASDAQ 0.04%
Equities kicked off the fourth quarter with modest gains following the release of September ISM Manufacturing PMI data and steady initial jobless claims. The volatility was apparent throughout trading as the 10-year U.S. Treasury spiked. Construction Spending turned positive in August for the first time since May.
Friday S&P 500 0.73% | NASDAQ 1.19%
Stocks rallied on Friday after the September nonfarm payrolls report showed U.S. employers added just 29,000 jobs – substantially below consensus forecasts. – while the unemployment rate ticked up to 4.2%2 . Treasury yields tumbled across the curve as traders sharply reduced expectations for an October Federal Reserve Rate Hike. The prospect of easing borrowing costs sparked widespread buying across large-cap tech, AI leaders, and cyclical equities, pushing the Nasdaq to a weekly gain.
Conclusion S&P 500 0.27%3 | NASDAQ 0.76%4
The past week highlighted the market’s responsiveness to shifting macroeconomic data as cooling employment metrics quickly countered earlier fixed-income headwinds. While the modest weekly decline in the S&P 500 reflects earlier pressure from elevated bond yields, Friday’s surge underscores the powerful tailwind provided by potential central bank flexibility. A low month for jobs added revealed what may be underneath the surface from employers and hiring expectations. After a rate hike in September, markets will be taking cues from the Federal Reserve multiple minutes set to release next week. Their next meeting will take place at the end of the month. Right now, chances of rates holding steady are being priced in but there is still data over the next month to consider. In the meantime, markets went shopping for growth stocks last week.
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