đź“Š Weekly Market Recap
- S&P 500 return Year-to-date were approximately 11.42%
- S&P 500 3 month return were approximately 2.65%
- S&P 500 return over the past month were approximately -2.92%
- S&P 500 return over the past 7 days were approximately -2.95%
This Week in the Markets- 3 Things to Know
A Sigh of Relief– NVIDIA reignited the entire AI trade after posting another monster quarter, with revenue and earnings smashing Wall Street expectations yet again. The company reported revenue growth above 200% year-over-year and delivered an Earnings Per Share (EPS) figure that beat consensus by a wide margin, reaffirming its dominance in the AI infrastructure cycle. CEO Jensen Huang emphasized unprecedented demand for Blackwell-generation chips, which are already booked out and major enterprise partners into 2026. Data center revenue continues to be the star of the show, rising at a pace the market has rarely seen in a mega-cap company. Shares climbed more than 6% in after-hours trading, with NVIDIA jumping from roughly $186 to nearly $198 within minutes of the data release. The move added tens of billions of dollars to NVIDIA’s market cap overnight, lifting the entire semiconductor sector with it. Traders interpreted the report as proof that AI spending is not just holding steady it’s accelerating.
Walking the Tight Rope- The market spent the week walking a tightrope as softer-than-expected labor data failed to push the Federal Reserve toward a more dovish stance, even as the economy added a steady 119,000 jobs in September, reinforcing hopes for a soft landing. Despite the weaker headline data, traders actually reduced the probability of a December rate cut, with fed fund futures previously assigning a moderate chance falling sharply as investors reassessed the macro backdrop. The Fed has emphasized that inflation must convincingly move toward the 2% target before easing policy, and recent CPI and PCE readings have only made that timeline more uncertain. Meanwhile, Treasury yields refused to budge, with the 10-year staying elevated, signaling the bond market wasn’t buying the cuts coming soon narrative. Still, job growth above the 100k threshold historically supports GDP stability, especially heading into Q4 when consumer spending accelerates, and that resilience provides a crucial floor for the broader economy. This steady labor backdrop, however, complicates the Fed’s timing, since policymakers may interpret continued strength as a reason to delay easing further into 2025. Rate-sensitive sectors like real estate, utilities, and small caps reacted cautiously as sentiment proved hypersensitive to even small economic surprises. Yet markets generally prefer stability, and the September hiring data delivered just enough to keep the soft-landing story alive. Altogether, until inflation cools more convincingly, the market remains suspended between optimism and macro reality but supported by an economy still capable of absorbing higher
The Bond Market Isn’t Buying It- Rising long-term Treasury yields have become one of the clearest signals that the bond market isn’t buying into the idea of imminent rate cuts. Even as some economic data softens, the 10-year and 30-year yields have remained stubbornly elevated, reflecting investor skepticism that the Federal Reserve will pivot anytime soon. Higher long-term yields typically mean markets expect inflation to stay sticky or policy to stay tighter for longer—both of which push borrowing costs up across mortgages, business loans, and corporate debt. This has created pressure on rate-sensitive sectors like real estate, utilities, and small caps, which rely heavily on cheaper financing. The persistence of elevated yields also tightens financial conditions on its own, acting almost like a shadow rate hike for the economy. Until markets see a convincing shift in inflation trends or more dovish Fed messaging, long-term yields are likely to hold their ground. For now, the bond market is clearly signaling: don’t expect meaningful easing just yet.
When Momentum Dissolves
This week delivered the full spectrum of market dynamics optimism, volatility, and a sharp dose of reality. The week opened with three consecutive sessions of weakness, only for NVIDIA’s blowout earnings to reignite enthusiasm around the AI trade and briefly lift the NASDAQ. For a short window, markets flashed solidly green, futures rallied, and sentiment shifted almost instantly. But as quickly as the momentum arrived, it evaporated. The early surge faded within minutes, leaving the broader market struggling to follow NVIDIA’s lead. While mega-cap tech attempted to stabilize the landscape, the rest of the market signaled ongoing challenges. By midday, volatility had returned, investor confidence wavered, and price action felt driven more by sentiment than by fundamentals. It was the type of week where early-day optimism routinely gave way to late-day uncertainty.
Federal Reserve developments only amplified the swings. Despite softer labor data, markets surprisingly reduced expectations for a December rate cut a move that felt counterintuitive given the economic backdrop. Fed officials maintained their steady messaging, reiterating that while progress is being made, policy is not yet at an inflection point. Treasury yields held firm at elevated levels, underscoring the Fed’s reluctance to move prematurely. Rate-sensitive sectors such as real estate, small caps, and utilities absorbed the immediate impact. Meanwhile, traders monitored Fed futures with near-constant attention, trying to assess whether a meaningful easing cycle is truly on the horizon. The overarching takeaway is the Chair Jerome Powell remains cautious, and the path toward rate cuts is unlikely to accelerate.
Despite the market’s frequent mood shifts, the underlying economy remained relatively stable. The U.S. added 119,000 jobs a figure that, while not headline-grabbing, supports the ongoing soft-landing narrative. Consumer spending remained resilient, corporate earnings were largely intact, and forward guidance avoided the dour tone some feared. Yet the disconnect between economic stability and market behavior grew increasingly clear. Each rally appeared constructive but fragile, vulnerable to even a modest inflation surprise or a shift in rate expectations. As the week came to a close, investors found themselves caught between strong momentum in AI-driven sectors and persistent uncertainty around monetary policy. Looking ahead, the central question is whether the market can sustain a clean breakout or if the current pattern of early strength followed by late-day pullbacks will continue into next week
S&P 500 SECTOR SNAPSHOT- Past Week
