Wall Street spent the week of October 5 doing its favorite impression of a person who has had too much coffee and not enough sleep worrying about yields, records and nerves. Stocks pushed into record territory, bond yields sat at levels last seen when flip phones were still a thing, and oil prices jumped around on war headlines. The soft September jobs report from the prior Friday, just 29,000 payrolls and a 4.2% unemployment rate, had already talked traders out of an October Federal Reserve rate hike. The market then spent this week deciding whether that was good news, bad news, or both before lunch.
Yields at a 24-year high
The 10-year Treasury yield touched above 5.35% on Monday, the highest in 24 years, and finished the session near 5.32%. That is the rate that quietly sets the price of mortgages, corporate borrowing, and a lot of investor patience. Softer hiring had cut the odds of an October rate hike from about 70% a week earlier to roughly 24%, yet the long end of the bond market refused to relax.
Traders blamed firm growth, energy-driven inflation, and a flood of corporate debt tied to artificial-intelligence spending. Stocks rose anyway. The Nasdaq closed at a record high 27,477, Nvidia added 2.1% and finished with a market value around $5.76 trillion, and the S&P 500 ended at 7,773.95, a short stroll from its August high.
S&P 500 clears 7,800
Tuesday was the victory lap. The S&P 500 closed at a record high 7,818.93, its first finish above 7,800, and the Nasdaq tacked another record onto Monday’s. Easier yields helped, and so did a power story that sounds like science fiction until you read the invoice. Constellation Energy jumped about 12% after Google agreed to buy electricity from 890 megawatts of new nuclear capacity, with Constellation putting more than $4.3 billion into the build. The chip trade and the power trade held hands and walked the indexes higher. Small stocks did not get the invitation. The Russell 2000 fell on the day, a reminder that a record close is not the same thing as a broad party.
Fed minutes split the room
Wednesday’s minutes from the September 15–16 meeting explained a unanimous 1/4 hike that still left the room arguing. The Federal Reserve rate hike lifted the policy rate to a range of 3.75% to 4.00%, the first increase since July 2023. Some officials called it insurance against energy and other price shocks. A hawkish core treated it as a step toward tighter policy aimed at demand. Most participants thought another increase would likely be appropriate by year-end, while stressing that each meeting is open. Investors heard “not necessarily October.” Chairman Warsh had earlier described the move as removing a dose of accommodation, which had briefly fanned bets on a quick follow-up. The minutes cooled that without canceling a December hike.
Oil and an OpenAI scare
Thursday brought the hangover. Brent crude settled up 4.1% and West Texas Intermediate up 3.6% as Middle East tensions and a cut in U.S. output revived inflation and Federal Reserve rate hike worries. U.S. crude is already up more than 60% this year amid the Iran war, which is a rough way to discover that energy still matters.
Chip stocks slumped after the Financial Times reported OpenAI’s annualized revenue at about $50 billion at the end of September, short of a widely cited $68 billion figure that included partner gross revenue. Nvidia fell about 3%, Oracle nearly 6%, and CoreWeave nearly 8%. Since last Friday’s close the S&P 500 gained 89 points or 1.15%. The NASDAQ added 175 points or .64%, hitting another record high. While the DOW increased 478 points or .93% to close a solid week.
Shoppers near a sentiment low
Friday tried to put a bow on a record-setting week even as the household mood did not cooperate. The University of Michigan’s preliminary October sentiment index fell to 46.3 from 48.1, below forecasts and only 1.5 points above the all-time low. Year-ahead inflation expectations rose to 4.7% from 4.6%, and from 3.4% in February before the war with Iran. Director Joanne Hsu said frustration over the cost of living is mounting, especially for lower-income households. Brent crude settled at $104.72 after bouncing between about $102.50 and $105, and the 10-year Treasury yield was near 5.24%. Stocks rose anyway, led by a 12.5% jump in Humana on Medicare Advantage quality ratings.
The week’s lesson was an old one with new price tags. A cooler jobs number can delay a Federal Reserve rate hike, and a nuclear power contract can light up a record close. Neither one cancels a 5.3% Treasury yield, $100 oil, or shoppers who think inflation is still in the room. Earnings season starts next week. The indexes may keep climbing. The bond market has already sent the bill.
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