The S&P 500 Index ($SPX) (SPY) closed up by +0.73% on Friday, the Dow Jones Industrial Average ($DOWI) (DIA) closed up by +0.49%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.00%. December E-mini S&P futures (ESZ26) rose +0.73%, and December E-mini Nasdaq futures (NQZ26) rose +1.01%.
Stock indexes settled higher on Friday, with the S&P 500 posting a 1-week high and the Nasdaq 100 posting a new all-time high. Stocks moved higher after weaker-than-expected US economic reports bolstered speculation that the Fed won’t be forced to raise interest rates this month. The Sep payrolls report showed that payrolls slowed sharply, and wage pressures were lower than expected. Also, Aug factory orders rose less than expected. In addition, Friday’s rally in chipmakers pushed the Nasdaq 100 to a new record high.
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Lower crude oil prices on Friday also helped market sentiment and lifted stocks. WTI crude fell more than 1% on Friday after the Group of Seven nations (G7) announced it will release 100 million bbl of crude and diesel from strategic reserves.
Stocks fell back from their best level on Friday after bond yields moved higher, despite the weaker-than-expected US economic reports on Sep payrolls and Aug factory orders. Bond yields rose on hawkish comments from Dallas Fed President Lorie Logan, who said, "I currently estimate the fed funds target range needs to rise an additional 50 bp or more to appropriately balance the outlook and risks for our dual mandate goals." The 10-year T-note yield rose by +4 bp on Friday to 5.28%.
US Sep nonfarm payrolls rose by +29,000, weaker than expectations of +90,000, and Aug payrolls were revised lower to +133,000 from the originally reported +162,000. The Sep unemployment rate unexpectedly rose +0.1 to 4.2%, showing a weaker labor market than expectations of no change at 4.1%.
US Sep average hourly earnings rose +0.1% m/m and +3.0% y/y, weaker than expectations of +0.3% m/m and +3.1% y/y.
US Aug factory orders rose +0.1% m/m, weaker than expectations of +0.2% m/m, and Aug factory orders ex-transportation rose +0.3% m/m, weaker than expectations of +0.6% m/m.
Nov WTI crude oil prices (CLX26) fell more than -1% on Friday after the Group of Seven nations (G7) and its partners announced that they will release 100 million bbl of crude and diesel supplies from strategic reserves. The International Energy Agency is coordinating the release, which will take place over the next four months. However, crude prices recovered from their worst levels on concerns of renewed Middle East tensions when Reuters reported that Saudi Arabia plans an offensive against the Houthi militants in Yemen.
Markets are discounting a 23% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets settled mixed on Friday. The Euro Stoxx 50 closed up +1.02%. China's Shanghai Composite did not trade, with markets in China closed for the week-long Golden Week holidays. Japan's Nikkei-225 Stock Average closed down -0.94%.
Interest Rates
December 10-year T-notes (ZNZ6) closed down -9.5 ticks. The 10-year T-note yield rose +4.0 bp to 5.281%. T-notes erased an early rally on Friday and settled lower on speculation the Fed may raise interest rates despite the weaker-than-expected US economic reports on Sep payrolls and Aug factory orders. Hawkish comments from Dallas Fed President Lorie Logan weighed on T-notes when she said the Fed needs at least another 50 bp of rate hikes to fully cool inflation.
T-notes initially moved higher on Friday on the Fed-friendly Sep payroll report, which showed a smaller-than-expected increase in nonfarm payrolls and a smaller-than-expected increase in average hourly earnings. T-notes also found support Friday from the weaker-than-expected Aug factory orders report and the -1% decline in WTI crude oil prices, which lowers inflation expectations.
European government bond yields moved lower on Friday. The 10-year German bund yield fell to a 3-week low of 3.374% and finished down -4.6 bp to 3.462%. The 10-year UK gilt yield dropped to a 1-week low of 5.291% and finished down -3.2 bp to 5.366%.
Eurozone Sep CPI rose +3.8% y/y, stronger than expectations of +3.7% y/y and the fastest pace of increase in 3 years. Sep core CPI rose +2.5% y/y, right on expectations.
Markets are discounting a 14% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
The Magnificent Seven technology stocks rose on Friday, a positive factor for the overall market. Tesla (TSLA) closed up more than +4%, and Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), and Nvidia (NVDA) closed up more than +1%. Also, Microsoft (MSFT) closed up +0.92%, and Meta Platforms (META) closed up +0.30%.
Chipmakers and AI-infrastructure stocks rallied on Friday, supporting gains in the broader market. The iShares Semiconductor ETF (SOXX) climbed to a 3-month high and finished up more than +2%. ARM Holdings Plc (ARM) closed up more than +5%, and Texas Instruments (TXN) closed up more than +4%. Also, Microchip Technology (MCHP), Broadcom (AVGO), KLA Corp (KLAC), Analog Devices (ADI), and ASML Holding NV (ASML) closed up more than +3%. In addition, Advanced Micro Devices (AMD), Lam Research (LRCX), and Applied Materials (AMAT) closed up more than +2%.
IT service stocks retreated on Friday, a negative factor for the broader market. Accenture (ACN) closed down more than -6%, and Globant SA (GLOB) and EPAM Systems (EPAM) closed down more than -5%. Also, Gartner (IT) closed down more than -4%, Cognizant Technology Solutions (CTSH) closed down more than -3%, and International Business Machines (IBM) closed down more than -1%.
Synaptics (SYNA) closed up more than +14%, and ON Semiconductor (ON) closed up more than +6% after ON Semiconductor said it will buy Synaptics for $123 per share in cash.
Hewlett Packard Enterprise (HPE) closed up more than +7% after Susquehanna Financial raised its price target on the stock to $70 from $40.
NetApp (NTAP) closed up more than +5% after Loop Capital Markets raised its price target on the stock to $260 from $215.
Western Digital (WDC) closed down more than -10% to lead losers in the S&P 500 and Nasdaq 100, and Seagate Technology Holdings Plc (STX) closed down more than -10% after Nikkei reported that Toshiba would invest 60 billion yen to double its production capacity for hard disk drives.
Nike (NKE) closed down more than -3% to lead losers in the Dow Jones Industrials after forecasting 2027 adjusted EPS of $1.15 to $1.35, well below the consensus of $1.65.
Earnings Reports (10/5/2026)
BRT Apartments Corp (BRT).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.