Weekend Market Report 10/4/26

Friday’s soft jobs print gave the tape a late-week bid, but the week itself was still a grind. The S&P 500 closed at 7,722.72, down 0.27% for the five sessions. The Dow finished at 51,176.96, off 1.26%. The Nasdaq was the outlier at 27,190.86, up 0.45% and tagging a fresh high on Friday. Russell 2000 was basically flat, down 0.16% at 2,832.90. VIX settled at 15.31 after a sharp Friday drop.

The story was yields versus growth. The 10-year pushed to a 24-year high near 5.33% midweek (geopolitical noise around the Strait of Hormuz and firmer oil early in the week didn’t help), then eased after the payrolls miss and finished the week higher, around 5.28%. WTI spent time near $93–94 before sliding into the high $80s by Friday’s close. Tech and semis carried the load; financials, health care, and staples lagged. Breadth stayed soft for most of the week — equal-weight continued to underperform, and fewer than a quarter of S&P names were above their 50-day at points. Friday repaired some of the damage, but it didn’t erase the underlying divergence.

The catalyst was September nonfarm payrolls: +29,000 versus roughly 84–90k expected, unemployment ticking up to 4.2%, and prior months revised down a combined 60k. Average hourly earnings were tame (+0.1% m/m, 3.0% y/y). October Fed hike odds, which had been elevated after the September hike to 3.75–4.00%, collapsed from the mid-60s percent range into the teens. That was enough to spark a classic growth rebound — Nasdaq +1.19%, semis strong, Tesla up roughly 4.5–4.7% on better-than-expected Q3 deliveries (about 487k). Nike was the notable miss after a weak China-tinged outlook. Gold eased on the week; crypto was mixed.

What to watch this week

The calendar is lighter, which usually means the bond market and any residual geopolitical headlines set the tone until earnings start to matter more.

Monday:

September ISM Services PMI. A firm print keeps the “economy is fine, yields can stay elevated” narrative alive; a clear miss would reinforce Friday’s rate-relief trade.

Wednesday:

FOMC minutes from the September 15–16 meeting (2 p.m. ET). The Fed hiked 25 bp, and the dots leaned toward at least one more move this year. Traders will parse how split the committee was and how much weight they put on the labor cooling that just showed up. Microsoft also has a Windows/Surface event that day, with Nadella and Jensen Huang expected — another AI optics check.

Thursday: Weekly claims.

Friday:

University of Michigan preliminary sentiment.

Earnings are sparse but useful as a consumer read-through: Constellation Brands Tuesday after the close, Levi Strauss Wednesday, PepsiCo and Delta later in the week. Full bank season starts the following week. China is closed for Golden Week through midweek, so Asia liquidity is thinner.

Levels and bias

S&P is about 1% off the August closing high near 7,799. Friday’s bounce held the recent 7,650–7,670 area; a push through 7,780–7,810 would put the highs back in play. Failure back under Friday’s low / the 7,660 zone reopens the midweek yield-driven selling. Nasdaq leadership is intact as long as semis and the mega-cap complex don’t roll over on any yield spike. The 10-year remains the swing factor — stabilization or a drift lower supports the growth bounce; a quick retest of 5.30%+ puts pressure back on multiples.

Net: Friday looked like a relief squeeze in a still-hated rally, not a clean all-clear. Soft labor data bought time on the Fed, but yields are elevated, breadth is mediocre, and the market is still digesting a higher-for-longer path after the first hike in three years. Early earnings and the minutes will tell us whether Friday was the start of a repair or just a one-day repricing. Trade the levels, not the narrative.

Actionable items

1-Treat Friday as a relief squeeze, not an all-clear. S&P support sits in the 7,650–7,670 zone from last week’s lows; a daily close back under that area reopens the yield-driven selling. Resistance is 7,780–7,810 — a push through there puts the August highs back in play.

2-Stay long Nasdaq/semis leadership only while the 10-year is stable or drifting lower. A quick retest of 5.30%+ signals it’s time to tighten stops on growth and mega-cap tech rather than add.

3-Use early consumer prints (STZ, LEVI, PEP, DAL) as a read on demand and margins, not as a reason to chase the indexes. Weak commentary on pricing or volumes is a reason to fade discretionary strength into next week’s bank reports.

4-Keep position size modest into Wednesday’s minutes. The committee just delivered the first hike in three years; any hawkish color on inflation versus the new labor softness can reverse Friday’s repricing fast. Trade the levels, not the narrative.

Bond market

What matters this week is whether Friday’s yield relief holds. ISM Services on Monday and the September FOMC minutes on Wednesday (2 p.m. ET) are the tests. A firm services print or hawkish minutes color — the Fed just hiked to 3.75–4.00%, and the dots still leaned toward more tightening — can put 5.30%+ back in play quickly. A soft ISM or dovish lean in the minutes would support a drift toward 5.15–5.20% and give the Nasdaq room to extend. No major coupon auctions dominate the calendar, so data and the minutes set the tone.

 Rates: treat 5.30–5.33% as resistance that, if reclaimed, cues a fade in extended tech rather than a buy-the-dip. A sustained break under 5.20% is the cleaner signal that Friday’s repricing has legs and that growth leadership can be held with wider stops. Until then, size equity risk to the bond tape, not the other way around.

A group to watch now…………

Utilities (XLU) just hit an extreme oversold condition, a setup that preceded an 82% three-month win rate and a 5.1% median return. It stands out because most of this week’s research leaned the other way, defensive. My favorites are VST and CEG.

PS>>>>>>>>>>>>>>>>>>

Only 20% of stocks in the S&P 500 are above their 50-day MA, which is where things bottomed in late March. Also, as of today, 56.6% of S&P 500 stocks were oversold, a level normally seen only during steep market selloffs. The S&P closed Friday less than 1% from an all-time high.

Last weekend’s market report highlighted some good winners. Some watchlist names I am watching this week include: AMZN/AMZU (at $251 and 20x earnings; Amazon is trading at its lowest valuation ever as a public company), VST, NBIS, PLTR, EWZ, FPS. I like them all and will expand on these and others as the week progresses.

See you in the morning in the Discord room.