WEEKLY MARKET RECAP – October 2, 2026

Strength in technology stocks helped lift the NASDAQ to a modest weekly gain, extending its outperformance relative to the other major U.S. indexes for a sixth consecutive week. The S&P 500 finished slightly lower, while the Dow declined more than 1%.

Bond investors faced another volatile week as yields on some government securities briefly reached their highest levels since 2002 before retreating modestly. Shorter-term yields were little changed overall, with the 2-year Treasury ending the week at 4.84%. Longer-term yields moved higher, with the 10-year Treasury reaching 5.28% and the 30-year rising to 5.63%.

The U.S. labor market returned to the slow-growth trend seen in late spring and early summer after showing improvement in August. The economy added just 29,000 jobs in September, well below consensus expectations of 80,000 to 90,000. Job growth estimates for the previous two months were also revised downward by a combined 60,000. The unemployment rate rose to 4.2% from 4.1% in August.

Following Friday’s weaker-than-expected employment report, bond markets reflected a reduced likelihood that the U.S. Federal Reserve would raise interest rates at its October 28 meeting. Rate futures indicated a roughly 79% probability that the Fed would leave its benchmark rate unchanged, compared with a 21% chance of a quarter-point increase, according to CME FedWatch. A week earlier, markets had assigned a 64% probability to a rate hike.

The Federal Reserve’s preferred inflation gauge showed that price pressures were lower than expected in the latest monthly report. The Personal Consumption Expenditures Index rose at an annual rate of 3.4% in August, below the 3.7% consensus forecast. Core PCE inflation, which excludes volatile food and energy prices, increased 3.0%, down from 3.3% in July and below economists’ expectations.

The major U.S. stock indexes delivered mixed results in September as the third quarter came to a close. Strong gains among several of the largest technology companies helped the NASDAQ outperform, with the index rising 1.9%. The S&P 500 declined 0.5%, while the Dow fell 4.3%, ending a five-month winning streak.

The government’s final estimate of second-quarter GDP showed stronger economic growth than previously reported, reflecting increased consumer and government spending. GDP expanded at an annualized rate of 2.2%, up from the previous estimate of 1.5%.

Higher bond yields also pushed mortgage rates sharply higher, with the average 30-year fixed-rate mortgage recording its largest weekly increase in four years. Freddie Mac reported Thursday that the average rate climbed to 7.28% from 7.03% the previous week. A separate national report showed that mortgage applications had declined for four consecutive weeks.