What Happened Yesterday
Monday, October 5. First full week of Q4. Tech walked in like it owned the place.
Close | Move | Mood | |
|---|---|---|---|
S&P 500 (SPY) | 774.83 | +0.67% | 0.3% from its record |
Nasdaq 100 (QQQ) | 756.20 | +0.88% | Popping bottles |
Dow (DIA) | 512.11 | +0.20% | Clapping politely |
Russell 2000 (IWM) | 283.38 | +0.66% | Invited, for once |
VIX | 15.52 | +1.37% | Yawning |
2-Year Treasury | 4.84% | +1 bp | Unmoved |
10-Year Treasury | 5.31% | +3 bp | Highest since 2002 |
30-Year Treasury | 5.66% | +3 bp | Also 2002 |
Gold (GLD) | 379.55 | -0.16% | Sulking |
Oil (USO) | 143.99 | -2.29% | Brent back near $100 |
Bitcoin | $85,787 | -0.80% | Hungover from Sunday |
The S&P 500 index rose 51.23 points to 7,773.95, about 25 points shy of its August 13 record. The Nasdaq Composite gained 286.45 to a record 27,477.31. The Dow added 90.94 to 51,267.90. Materials (+1.31%) led the sectors; real estate (-0.34%) was the only one in the red.
The Party Started Because
the Jobs Report Didn't Show Up
The Nasdaq Composite closed at a record 27,477.31, topping its September 22 high. Nvidia closed at a record $238.90, up 2.12%. Microsoft rose 1.48%, Meta 1.90%, Tesla 2.20%, Broadcom 2.08%.
The fuel was Friday's jobs report, which was so weak it practically called in sick. The economy added 29,000 jobs in September versus roughly 90,000 expected, and July and August were revised down by a combined 60,000. Bad news for workers. Great news for anyone who wanted the Fed to stop raising rates.
Odds of an October 28 rate hike are now about one in five, per CME FedWatch and Polymarket (19.5%). Two weeks ago they were around 70%. December is a different story: Polymarket still has a hike there at about 75%.
The $1,000 test: $1,000 in the Nasdaq Composite on January 1 is about $1,182 now.
Wall Street just threw a party because hiring nearly stopped. That's like celebrating your raise getting canceled because now your boss won't make you work Saturdays. It works right up until it's your job to revise.
The Bond Market Did Not RSVP
While stocks danced, the 10-year Treasury yield closed at 5.31%, per Treasury, its highest close since 2002. The 30-year hit 5.66%, same vintage. A yield is what the government pays to borrow. When it climbs, everything priced off it climbs too: mortgages, car loans, the credit card you swore you'd pay off.
Why won't bonds relax? Monday's ISM services survey, which asks service businesses how things are going, said the prices they pay hit 74.0, the highest since July 2022 and above the 72.9 forecast. All 17 service industries reported paying more. Business activity, meanwhile, fell to 56.5 versus 61.5 expected. Slower sales, higher costs. Economists have a word for that, and it isn't a fun one.
Then there's the borrowing. AFP tallies about $500 billion in tech-sector debt this year to build AI data centers, and says even Meta has paid more than 7% on some bonds. On Monday, banks started selling off pieces of a $60 billion loan package backing Anthropic's chip lease, with Broadcom guaranteeing the senior part, according to the Financial Times. Every dollar of that competes with Uncle Sam for the same lenders.
Stocks are pricing a Fed that blinks. Bonds are pricing inflation that doesn't. They can't both be right, and the bond market usually holds the receipts.
Tax-Free Tractor Fuel, Now Available for Your Pickup
Monday night at a rally in Nebraska, President Trump signed an executive order letting anyone use red-dyed diesel on highways. Red diesel is normally reserved for farm and construction equipment and skips highway fuel taxes. The White House says the federal excise tax gets deferred through the end of 2026. Diesel is running north of $6 a gallon, and the midterms are November 3. Pure coincidence, surely.
Trump said a typical trucker will save "over $100 every time they fill up." Check the math. The federal diesel tax is about 24 cents a gallon, so a 150-gallon fill saves roughly $37. The other $63 needs the states to play along, and the order only "encourages" them to.
Oil helped more than the pen did. Brent settled just over $100, down about 2%, after the G7 moved to release emergency reserves and Kpler data, reported by Reuters, showed Gulf crude exports topping pre-war levels on 14 days in September.
Cheaper diesel is real relief for truckers and farmers. But a tax holiday doesn't make more fuel. It just moves the bill to January, when everyone is checking what the holidays cost.
What to Watch Today
Tuesday, October 6 (all times CT).
7:30 AM: August trade balance (Census/BEA). Forecast deficit about $102 billion, up from $88.6 billion.
8:05 AM: New York Fed's John Williams speaks. He votes at every meeting and said "no need for urgency" last week.
9:45 AM: Fed Vice Chair for Supervision Michelle Bowman speaks. Also a voter.
Noon: $58 billion 3-year Treasury auction. The first of three this week. The 10-year goes Wednesday, the 30-year Thursday.
6:00 PM: Dallas Fed's Lorie Logan, a 2026 voter.
Paramount Skydance and Warner Bros. Discovery are set to close their merger today. WBD holders get about $31.02 a share in cash, and the combined company becomes Skydance. More than 435 million WBD shares traded Monday as index funds headed for the exit.
Earnings: Lamb Weston before the bell. Constellation Brands (Modelo, Corona) after the close, expected around $3.55 a share on $2.54 billion in revenue. Beer in a staples-sector slump. We'll be watching. Professionally.
Earnings season mood: FactSet says a record 72 S&P 500 companies raised their Q3 profit guidance, most since it started counting in 2006. Big banks report next week.
Wednesday, 1:00 PM: minutes from the Fed's September hike.
The one thing that could ruin everyone's day
A sloppy 3-year auction. If buyers demand a fat yield at noon, it tells the market that the "Fed will skip October" story isn't enough to make lenders comfortable. Then Wednesday's 10-year sale becomes a referendum, and the Nasdaq's record looks like it was set on a credit card.
The champagne's on the table. The bill is on the way.
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