Nasdaq Hits Record High as Weak Jobs Data Cuts Rate-Hike Bets; Dow Falls 1.93%

Mumbai, Oct 3: US equities ended the week of 28 September to 2 October 2026 mixed, as weaker employment data and softer inflation readings changed expectations around Federal Reserve policy. The Nasdaq Composite rose 1.09% to 26,871.60, while the S&P 500 gained 0.02% to 7,666.45. The Dow Jones Industrial Average fell 1.93% to 50,926.56. The week was shaped by a sharp rise and subsequent retreat in Treasury yields, with the September employment report showing only 29,000 new jobs and unemployment rising to 4.2%. The shift in rate expectations helped technology and semiconductor stocks recover, although broader market participation remained uneven.

Nasdaq Gains 1.09% as Weak Jobs Data Changes Rate Expectations

The week began with heavy selling in US equities before the market recovered towards the end. Technology stocks ultimately led the rebound, while smaller companies, financials and several defensive sectors remained under pressure.

On 28 September, the Dow fell 1.25%, the S&P 500 declined 1.36%, and the Nasdaq dropped 1.52% as semiconductor and artificial intelligence-related shares came under pressure. The Philadelphia Semiconductor Index fell more than 3%, while Micron Technology declined more than 4%. The 10-year Treasury yield moved towards 5.25%.

The following day, the Dow fell 0.26%, the S&P 500 was little changed and the Nasdaq gained 0.21%. The 10-year yield moved towards 5.28%, while Brent crude remained above $99 per barrel.

On 30 September, the Dow declined 0.86% to 50,906.05, the S&P 500 fell 0.25% to 7,651.54, and the Nasdaq gained 0.24% to 26,861.06. August PCE inflation came in at 3.4%, while core PCE was 3.0% year-on-year.

The final two sessions brought a change in tone. Treasury yields retreated from their highest levels in more than two decades, while Friday’s employment report showed only 29,000 payroll additions. The report was materially weaker than expectations and was accompanied by a rise in unemployment to 4.2%.

Treasury Yields Hit 5.344% Before Friday’s Jobs Shock

Treasury yields were the central driver of the week’s equity-market swings. The 10-year yield reached 5.344% on Thursday, its highest level since April 2002, while the 30-year yield reached 5.636%, its highest level in 24 years.

The rise in long-term yields initially put pressure on growth and rate-sensitive shares. However, yields reversed direction as the week progressed. The 2-year Treasury yield, which is particularly sensitive to expectations for Federal Reserve policy, declined by about 10 basis points on Thursday and another 9.8 basis points on Friday.

The 10-year yield subsequently moved towards 5.235%, reducing some of the pressure on technology and other long-duration shares. The 10-year/2-year spread widened from 40.60 basis points to 44.80 basis points, reflecting a steepening yield curve.

The movement in bonds was also influenced by global fiscal concerns, particularly developments in France. The France-Germany 10-year spread widened to 137.60 basis points, its highest level since January 2012, while European bond-market instability contributed to demand for US Treasuries.

September Jobs Rise Just 29,000 As Unemployment Reaches 4.2%

The most important economic release came on 2 October, when the US employment report showed that non-farm payrolls increased by only 29,000 in September. The unemployment rate rose to 4.2% from 4.1%. The August payroll figure was revised to 133,000, while earlier data revisions reduced previously reported employment gains.

The result was a sharp change in expectations for the Federal Reserve’s October meeting. Market-implied odds of a 25-basis-point rate increase fell sharply during the week, moving from about 68.6% to 24.9% in the supplied market data.

The employment report showed that hiring had slowed considerably, although the labour market had not stopped adding jobs altogether. Health care added 17,000 positions, construction added 11,000, and manufacturing added 9,000. Financial activities lost 7,000 jobs.

Average hourly earnings increased by 0.1% in September and were up about 3.0% from a year earlier. The average workweek remained at 34.4 hours. The three-month average payroll gain was around 51,000, indicating a considerably slower pace of employment growth.

The data also showed the unemployment rate edging higher as the labour market cooled. The combination of slower hiring, downward revisions and higher unemployment altered the immediate rate-policy discussion.

PCE Inflation Holds At 3.4% While Core Measure Stays At 3.0%

The inflation report released on 30 September provided another important input for monetary policy expectations. The headline Personal Consumption Expenditures price index rose 3.4% year-on-year in August, unchanged from July, while core PCE inflation remained at 3.0%.

On a monthly basis, headline PCE increased by approximately 0.3%, while core PCE rose around 0.2%. The figures showed that inflation remained above the Federal Reserve’s 2% target, but the latest monthly increases did not indicate a renewed acceleration in underlying price pressures.

At the same time, personal consumption expenditures increased by 0.9% in August, while personal income rose 0.2%. Disposable personal income increased 0.3%, and the personal saving rate stood at 4.1%.

The combination of moderate inflation data and a weaker employment report became important for the week’s change in interest-rate expectations.

Dow Falls 1.93% As Cyclicals and Industrials Face Pressure

The Dow Jones Industrial Average ended at 50,926.56, down 1.93% for the week. The index opened around 51,570 and reached a weekly high near 51,600, while its weekly low was approximately 50,800.

The Dow’s decline contrasted with the Nasdaq’s gain and reflected the difference in sector composition between the two benchmarks. Industrial, financial and other economically sensitive companies faced pressure as Treasury yields moved sharply higher during the first part of the week.

Microsoft fell approximately 2.5% over the week, while Apple declined around 1.8%. Chevron and Goldman Sachs provided some support, while weakness across several blue-chip constituents limited the index’s recovery.

The Dow’s movement also reflected the market’s narrow leadership. Technology and semiconductor stocks recovered more quickly once yields declined, while several cyclical and defensive groups remained weaker.

S&P 500 Ends Flat at 7,666.45 Despite Sharp Sector Rotation

The S&P 500 closed at 7,666.45, gaining only 0.02% for the week. The index moved from an approximate opening level of 7,620 to a weekly low near 7,580, before recovering towards a weekly high around 7,700.

The headline result concealed substantial differences between sectors. Energy benefited from higher crude prices, while information technology received support from the decline in Treasury yields towards the end of the week.

The equal-weighted S&P 500 remained under pressure, with the Invesco S&P 500 Equal Weight ETF on track for its seventh consecutive weekly decline. That divergence highlighted how much of the index’s performance was concentrated in larger technology companies.

On Thursday, nine of the S&P 500’s 11 sectors gained. Energy rose 1.9%, while consumer staples, health care, industrials, financials and real estate each fell more than 1%.

Nasdaq Reaches Record Close as Chip Stocks Recover

The Nasdaq Composite gained 1.09% during the week to close at 26,871.60. It began the week near 26,500, fell towards 26,300 on Monday and subsequently recovered as Treasury yields retreated.

Semiconductor stocks played a major role in the recovery. The Philadelphia Semiconductor Index rose as much as 3.4% intraday on Friday, after falling more than 3% on Monday.

Nvidia reached a record high, while Micron Technology gained approximately 3% after reporting strong fiscal fourth-quarter results. Broadcom and Advanced Micro Devices also participated in the semiconductor recovery.

The decline in the 2-year Treasury yield and the retreat in the 10-year yield reduced the pressure created by higher discount rates on growth-oriented companies. The Nasdaq therefore benefited more directly from the week’s change in rate expectations than the Dow.

Russell 2000 Falls 1.16% as Smaller Companies Face Higher Rates

The Russell 2000 ended at 2,804.63, down 1.16% for the week from approximately 2,837.57. The index opened near 2,850, reached a weekly high around 2,860, and fell towards 2,790.

The index’s 14-day Relative Strength Index stood at 32, while its 200-day simple moving average was around 2,780.01. The figures reflected the pressure on smaller companies during the rise in Treasury yields.

Small-cap companies generally have greater exposure to domestic economic conditions and borrowing costs. The week’s rise in long-term yields therefore coincided with weakness across the small-cap segment. Although the index recovered some losses on Friday, it remained weaker than the large-cap technology benchmarks.

Semiconductor Index Recovers From 3% Fall to End Higher

The Philadelphia Semiconductor Index recovered sharply after falling more than 3% on Monday. It closed Friday at approximately 12,886.64, up around 2.05% on the day, after reaching its highest level in three months.

Nvidia gained 2.77% on Friday, while Micron rose approximately 3%. Broadcom and AMD also advanced as the wider semiconductor group recovered.

Micron’s results added another company-specific catalyst to the sector. Its sales were reported at approximately $54.23 billion, representing a year-on-year increase of 379.3%. The performance reinforced the importance of data-centre and artificial-intelligence-related demand within the semiconductor market.

Energy Gains as Oil Moves Above $100 Per Barrel

Energy was the strongest S&P 500 sector on Thursday, rising 1.9% as Brent crude moved above $100 per barrel. Geopolitical developments and concerns around Middle East supply supported crude prices during the week.

Brent opened near $98.67 and closed around $102.31, representing a weekly gain of approximately 3.4%. WTI opened near $95.07 and closed around $92.87, giving it a weekly decline of approximately 2.3%.

The two benchmarks moved differently during the week, reflecting variations in regional supply conditions and geopolitical risk. Energy shares received support from higher Brent prices, although the sharp intraday reversal in WTI on Friday created additional volatility.

Gold Falls 1.5% as Yields and Dollar Pressure Metals

Gold opened near $4,273 per ounce and closed around $4,223.49, a weekly decline of approximately 1.5%. It reached a weekly low near $4,130 on Thursday before recovering.

The decline occurred as Treasury yields remained elevated for much of the week and the US dollar strengthened. Gold subsequently rose 1.1% on Friday after the weak employment report changed expectations around interest rates.

Silver fell approximately 1.3%, opening around $52.50 and closing near $51.80. Copper declined approximately 1.4% from $4.85 to $4.78 per pound. Natural gas moved in the opposite direction, gaining approximately 2.0% from $3.45 to $3.52 per MMBtu.

Dollar Gains 0.3% Before Payroll Data Changes Direction

The US Dollar Index opened around 101.50 and closed near 101.789, a weekly gain of approximately 0.3%. It reached approximately 102.20 on Thursday before retreating after the employment report.

EUR/USD declined approximately 0.9%, moving from around 1.1375 to 1.1274. The euro touched a yearly low of 1.1215 on Thursday amid concerns surrounding French fiscal conditions.

USD/JPY rose approximately 0.1%, from 157.50 to 157.65, after reaching around 158.45. GBP/USD increased approximately 0.1%, moving from 1.3244 to 1.3256.

The currency market reflected the same competing forces affecting bonds: higher US yields supported the dollar during the earlier part of the week, while weaker employment data reduced rate-hike expectations later in the period.

Technology Leads Sector Rotation While Health Care Lags

The week’s sector movements reflected the sharp change in Treasury yields and the rotation towards technology.

Information technology gained approximately 0.5% during the week and was the only S&P 500 sector to finish September in positive territory. Communication services were broadly unchanged, while consumer discretionary edged higher as Tesla recovered.

Consumer staples fell around 1.5% on Thursday, while financials declined approximately 1.1%. Health care fell around 1.4%, industrials declined approximately 1.3%, and utilities lost approximately 1.5%. Real estate fell around 1.0%.

Materials were mixed, with precious-metals miners affected by movements in the dollar and commodity prices. Energy remained the strongest sector on Thursday, supported by crude oil.

The sector pattern showed a clear difference between technology-led growth shares and groups more directly exposed to rates, domestic economic activity and defensive positioning.

Magnificent Seven Results Remain Mixed Across Major Technology Stocks

The Magnificent Seven stocks delivered mixed performances during the week. Apple declined approximately 1.8%, while Microsoft fell around 2.5%.

Alphabet was little changed, while Amazon edged higher. Nvidia reached a record high after announcing a large stock buyback and benefited from the broader semiconductor recovery.

Meta Platforms ended a strong run with a weekly decline, while Tesla recovered its earlier losses after reporting robust third-quarter delivery figures.

The different performances within the group reflected the broader divergence between individual technology companies. Nvidia and Tesla provided notable support, while Microsoft and Apple remained weaker after the early-week technology sell-off.

Federal Reserve Signals Less Urgency Ahead Of October Meeting

The Federal Reserve did not hold a policy meeting during the week, but comments from senior officials influenced rate expectations.

New York Fed President John Williams indicated there was no urgency to raise rates further. Fed Vice Chair Philip Jefferson said policymakers needed more time to assess the changing economic environment, while Fed Governor Michelle Bowman also indicated no urgency for further rate adjustments this year.

The market’s implied probability of a 25-basis-point increase at the 27–28 October 2026 meeting fell sharply during the week. The supplied data showed the probability moving from 68.6% to 24.9%, before falling further to approximately 16% after the jobs report.

The Federal Reserve’s September meeting had produced a 25-basis-point increase, taking the policy range to 3.75%-4.0%. The subsequent inflation and employment data changed the immediate rate-policy expectations reflected in financial markets.

VIX Falls to 15.60 As Friday Rally Reduces Near-Term Volatility

The CBOE Volatility Index closed at 15.60, down from approximately 16.39 the previous week. It reached around 17.59 on Thursday before declining on Friday.

The Nasdaq Volatility Index rose to approximately 22.98, while the S&P 500 three-month volatility measure remained higher than the near-term VIX. The pattern showed that while immediate volatility eased after the employment report, uncertainty further along the curve remained elevated.

The decline in the VIX accompanied the final-session recovery in US equities, when Treasury yields fell and rate-hike expectations changed.

Key Weekly Market Figures Show a Narrower Equity Recovery

Across the principal US benchmarks, the weekly picture remained uneven. The Nasdaq gained 1.09%, the S&P 500 gained 0.02%, the Dow fell 1.93%, and the Russell 2000 declined 1.16%.

The S&P 100 gained approximately 0.88% intraday on Friday, reflecting strength among large-cap technology stocks. The Dow Jones Composite Average declined approximately 1.8%, while the Dow Jones Utility Average fell around 1.5%.

The NYSE Composite declined approximately 1.2%, showing that weakness extended beyond the Dow into a wider group of financial, industrial and consumer companies. The S&P MidCap 400 had declined approximately 4.9% during September, while the S&P SmallCap 600 fell approximately 5.4% over the same month.

The week’s figures therefore showed a marked difference between large-cap technology-led indices and broader groups of companies.

The week was shaped by three measurable developments: 29,000 September payroll additions, a 4.2% unemployment rate and Treasury yields retreating from multi-year highs. The Nasdaq gained 1.09%, while the Dow declined 1.93%, leaving technology and semiconductor shares comparatively stronger than several broader market segments.