Monday, 10/5/2026 p.m.

• Stocks trade higher to begin the week – U.S. equity markets closed mostly higher on Monday, with the S&P 500 gaining 0.7% and the tech-heavy Nasdaq rising over 1%. Market leadership was broad-based, with every S&P 500 sector finishing higher except real estate. Growth-oriented sectors such as technology and communication services were among the top performers, alongside the cyclical materials sector. On the economic front, the September ISM Services PMI showed that activity in the U.S. services sector remains healthy, with the index holding steady at 54.9, comfortably above the expansion-contraction threshold of 50. Longer-term bond yields continued to move higher, with the 10-year Treasury yield finishing the day around 5.31%, while the 2-year yield was slightly lower at 4.82%. In commodity markets, oil prices posted a modest decline, with WTI crude oil finishing around $89 per barrel.
• The economy is holding firm in the face of higher rates – Elevated bond yields remain in focus to begin the week, with the 10-year Treasury yield trading just above 5.3%. Higher borrowing costs could temper business investment and slow economic activity, but recent data continue to point to economic resilience. Last week’s September ISM Manufacturing PMI showed that the goods-producing sector continues to emerge from a multiyear slowdown, with the index holding steady at 54.5, well above the expansion-contraction threshold of 50. Although manufacturing represents a relatively small share of the U.S. economy, its sensitivity to the business cycle makes it a useful barometer of broader economic conditions. In our view, its recent improvement is an encouraging signal for the economy. Consumer spending also remained resilient through August, with inflation-adjusted household spending rising 0.6% for the month and 2.6% from a year earlier. Meanwhile, although employment growth slowed in September, nonfarm payrolls have increased by an average of roughly 68,000 per month this year. We view that as a healthy pace given the decline in the labor force since the end of 2025. Elevated borrowing costs, tighter monetary policy, and geopolitical uncertainty still pose risks to economic and market momentum, but the latest data suggest that broader economic conditions remain on solid footing, in our view.
• Stocks enter the final stretch with solid momentum – Equity markets are entering the fourth quarter with solid momentum, with the S&P 500 up more than 12% through last Friday’s close. Historically, the fourth quarter has been a seasonally favorable period for stocks. Since 1990, the S&P 500 price index has risen by an average of 5% during the fourth quarter, with positive returns 83% of the time*. Strong momentum entering the quarter has historically been followed by even better performance. In the 14 years since 1990 in which the S&P 500 had gained at least 10% through September, the index returned an average of 6.4% in the fourth quarter, with gains in 13 of those 14 years, or 93% of the time*. History is no guarantee, however, and higher borrowing costs along with geopolitical uncertainty could test market resilience. Nevertheless, we believe resilient economic data and healthy corporate profit growth should remain important pillars of support for equities.

Brock Weimer, CFA
Investment Strategy

^{Source for all data not cited: FactSet.
Source for data cited: *Morningstar Direct, Edward Jones calculations. S&P 500 price index.}