Market Update for October 5-9, 2026

Executive Summary

US equities rose with limited participation. SPY gained 1.16%, DIA gained 0.98%, and QQQ gained 0.23%. IWM lost 0.92%. Investors favored large, profitable companies over smaller firms exposed to financing costs.[1][2][3][4]

Investors bought equities ahead of third-quarter earnings while financing costs remained high. The 10-year Treasury yield ended the week at 5.24%, only 4 basis points below the prior Friday. The 30-year ended at 5.60%.[13]

The Fed reinforced that message. The September minutes said most participants still judged another rate increase by year-end as likely appropriate. Waller said additional hikes would be needed if the data keep coming in as expected, while giving the Fed flexibility on timing.[15][14]

Global equities lagged. ACWX fell 0.70%. Europe had better PMI activity, but inflation and fiscal risk kept the euro under pressure. China did not provide a strong offset. The global story is still uneven growth with a higher discount rate.[5]

Crypto did not confirm an improvement in liquidity. Bitcoin fell 2.31% and Ethereum fell 6.84% from Friday close to Friday close. ETH weakness was inconsistent with a broad improvement in funding conditions.[6][7]

Commodities gave a different signal. Brent rose 2.42%, copper rose 2.32%, gold rose 1.30%, and WTI rose 0.81%. Demand for energy, metals, and inflation protection remained strong. Commodity strength can support nominal earnings while keeping the Fed restrictive.[9][10][11][12]

The setup: stay selective. Own businesses that can fund growth internally. Be slower with companies whose equity value depends on lower rates arriving fast.

US Stock Market

The S&P 500 proxy rose from $769.64 to $778.57. The Nasdaq proxy rose from $749.58 to $751.27. The Dow proxy rose from $511.10 to $516.11. Small caps moved the other way, with IWM falling from $281.52 to $278.94.[1][2][3][4]

The gains were selective. The market is buying companies that can defend margins and access capital, not every business tied to the cycle. That matters more than the headline index move.

Reuters reported that investors turned toward third-quarter earnings and inflation data after Friday's close, with LSEG estimates calling for 30.6% aggregate S&P 500 earnings growth for the July-September period. Energy and technology were expected to lead with 123% and 66.5% year-on-year growth. Those numbers set a high bar for the coming reports.

PepsiCo was a useful early read on that bar. Q3 net revenue rose 5.6% and organic revenue rose 3.1%. Core EPS rose only 2%, and core constant-currency EPS rose 1.5%. Management cut full-year core constant-currency EPS growth guidance to 1%-2% from the prior low end of 4%-6%.[17]

Revenue can still grow, but input costs, marketing spend, and North American execution can absorb the benefit before it reaches earnings. That is why I do not want to buy the whole index as if every earnings dollar is equally durable.

My view: the market may overpay for index-level earnings growth while failing to distinguish between self-funded compounders and firms that need cheaper financing or margin relief. This view comes from the data above. It has not been backtested. The evidence that would change it is broader participation with improving earnings revisions and stable long yields.

Global Markets

Global ex-US equities did not keep up. ACWX fell from $76.01 to $75.48, a 0.70% decline. Global stocks did not confirm a synchronized growth rally.[5]

Eurozone activity improved. Reuters reported that the eurozone composite PMI rose to 53.1 from 52.0 in August, its highest reading since April 2023. Services rose to 53.0. The problem is that the same region still faces higher inflation and political risk, so stronger activity does not automatically mean easier policy.

S&P Global's September PMI dashboard showed the US composite at 58.4, eurozone at 53.1, China at 52.4, Japan at 52.5, and the UK at 51.7. The US still has the strongest growth reading among the large developed markets. That supports US relative strength, but it also gives the Fed less reason to rush toward relief.

Country selection still matters within a diversified portfolio. I would assess which countries have earnings momentum, which have inflation pressure, and which currencies are absorbing the stress.

Cryptocurrency Market

Bitcoin fell from $84,497 to $82,546 between the two Friday UTC closes. Ethereum fell from $2,668 to $2,486. That is a 2.31% drop for BTC and a 6.84% drop for ETH.[6][7]

ETH acted more like a high-beta growth asset than a monetary hedge. It could not absorb the same financing pressure that small caps struggled with.

I would keep crypto as an opportunistic allocation. It can work when liquidity is improving and risk appetite is broad. This week did not show that. A stronger signal would be BTC and ETH rising together while yields fall and the dollar weakens.

Economic Indicators, Statistics and News

United States: services still expand, prices keep rising

ISM services came in at 54.9 in September, down 0.5 point from August but still in expansion for the 27th straight month. Business activity fell to 56.5, new orders stayed strong at 59.8, and employment moved back above 50 at 50.1.[16]

The inflation detail was less friendly. ISM's prices index rose to 74.0 from 72.6, the highest since July 2022. Seventeen services industries reported higher prices, and none reported lower prices. That is why a modestly softer headline activity number did not settle the Fed debate.[16]

The Fed minutes explain the reaction function. Participants saw solid activity, resilient spending, and inflation still above target. Several viewed policy as not restrictive or only mildly restrictive. Most still expected another hike by year-end.[15]

Waller sharpened the point on Thursday. He said the labor market remained stable, inflation was too high, and policy would focus on the inflation side of the mandate near term. He also said markets were pricing an 85% chance of at least one hike by December and nearly a 20% chance of two.[14]

Global: growth is not the same as relief

Global survey data stayed constructive, especially in the US and eurozone. But higher energy prices, AI-related demand, and tariff risk keep the inflation channel open. That combination can support nominal revenue while pressuring valuation multiples.

Better activity data need not support higher equity prices. When central banks are fighting inflation, stronger activity can mean higher terminal rates, not faster easing.

Foreign Exchange Markets

The dollar firmed. DXY rose from 101.93 to 102.21, a 0.27% gain. That is a small move, but it lines up with the rest of the week: US growth still looks better, and Fed officials are not ready to validate an easing trade.[8]

A stronger dollar tightens global financial conditions. It weighs on dollar borrowers, pressures commodities for non-US buyers, and can cap foreign equity returns for US-based investors. This week, it helped explain why global ex-US equities lagged while US large caps held up.

Commodities and Energy Markets

WTI rose from $91.11 to $91.85. Brent rose from $102.25 to $104.72. Oil did not collapse even as headlines around Iran talks reduced some immediate supply fear. Energy is still elevated enough to matter for inflation and corporate margins.[9][10]

Gold rose from $4,162 to $4,216. Copper rose from $6.49 to $6.64. The gains suggest continued demand for inflation protection and industrial exposure, rather than confidence in steady disinflation.[11][12]

For positioning, I would rather own commodity-linked exposure with clear cash flow and balance-sheet strength than chase high-duration equities just because the index is up.

Debt and Fixed Income Markets

The 2-year Treasury yield ended at 4.80%, down 3 basis points from the prior Friday. The 10-year ended at 5.24%, down 4 basis points. The 30-year ended at 5.60%, down 3 basis points. The small decline in yields offered little support to equity valuations.[13]

The minutes also discussed why long yields had risen: stronger data, AI-related borrowing expectations, and geopolitical developments. AI can support capex and earnings while also increasing demand for capital.[15]

Credit spreads staying tight would support the soft-landing case. But if long rates stay above 5% while small caps lag, financing costs still constrain the broader market.

What to Watch Next Week

The FHLBNY calendar lists CPI on Wednesday, then retail sales, jobless claims, and PPI on Thursday. Industrial production follows Friday. Big bank earnings also start the season.[18]

The bullish path is narrow but real: inflation cools, yields stay contained, bank credit quality holds, and earnings breadth improves beyond technology and energy.

The bearish path is also simple: CPI or PPI stays hot, the 10-year pushes back toward the highs, and earnings show revenue growth without operating leverage. That would confirm this week's message: the market can rise, but the financing regime still controls what deserves a premium.

Sources