Friday 10/2/2026 p.m.

• Stocks rise while bond pressures persist – Equity markets reacted positively to the September jobs report, which pointed to a labor market that is cooling but remains fundamentally healthy and is not showing signs of generating significant inflationary pressure. The bond market initially breathed a sigh of relief, but the drop in yields later reversed, and the 10-year Treasury yield ended near its highest level since 2002. All S&P 500 sectors except heathcare ended higher, while mid-caps and tech stocks outperformed, with the Nasdaq closing near its record high. Risk sentiment also received a boost from falling energy prices. Oil declined about 1.5%, following the news that the G7 nations will release as much as 100 million barrels of emergency oil and diesel stocks to avert a U.S. export ban and help curb the recent surge in fuel prices. On the corporate front, shares of Nike fell more than 3% after the company issued weaker-than-expected revenue and earnings guidance.
   
• Softer-than-expected jobs data eases pressure on yields and the Fed - The U.S. economy added 29,000 jobs in September, below expectations for 90,000, while payroll gains for the previous two months were revised lower by a combined 60,000. The unemployment rate edged higher to 4.2% from 4.1%, though the increase was driven by stronger labor force participation as more workers entered the workforce, a positive development. Wage growth also came in softer than expected at 3.0%, a pace below inflation. Taken together, the report suggests the labor market cooled from August but remains stable and improved from a year ago. Hiring remains sufficient to keep unemployment relatively low, but not strong enough to generate meaningful inflationary pressure. For the Federal Reserve, the data likely reduces any sense of urgency to tighten policy in October and pushes back against some of the more hawkish expectations that had emerged in recent weeks.
   
• Entering the final stretch on solid footing, but with some risks - As the final quarter of the year begins, the S&P 500 is up 13% year to date and sits just 1.5% below its all-time high, even as elevated interest rates and higher energy prices have tested the market's resilience. Much of that pressure has been concentrated in the most rate-sensitive areas of the market, with small-cap stocks falling 5% last month, while AI-related mega-cap technology stocks have helped mask some of the underlying weakness at the index level. Looking ahead, interest rates and oil prices will remain important market drivers, but earnings continue to be the market's primary source of support. Investors will soon shift their attention to third-quarter earnings season, which begins with the major banks in mid-October. Corporate profits are on track to grow roughly 30% this year, marking one of the strongest periods of earnings growth outside of post-recession recoveries. While higher rates and geopolitical uncertainty may continue to weigh on valuations and contribute to periods of volatility, a still-expanding economy and robust earnings growth should help provide a solid foundation for stocks through the remainder of the year.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.}