This week handed us one of those rare moments where bad news was genuinely good news, and the market actually believed it. September nonfarm payrolls came in at just 29,000 jobs against expectations closer to 90,000, unemployment ticked up to 4.2%, and wage growth slowed to 3.0%. Under normal circumstances that would be a red flag. But right now, with the 10-year yield having touched 5.34% mid-week at its highest level since 2002, a cooling labor market is exactly what the Fed needs to see to stand down. October rate hike odds dropped from around 60% to roughly 20% by Friday. That is a big shift in a short window.
The headline numbers tell the split story pretty clearly. The Nasdaq closed up 0.5% on the week at 27,190 and hit a fresh intraday record. The S&P 500 finished down 0.3% to 7,722. The Dow dropped 1.3%. If you were in AI and mega-cap tech, it was a good week. If you were in rate-sensitive sectors like financials, staples, and health care, you felt the yield pressure all week until Friday’s relief rally. Market breadth is still narrow, which I keep watching as a risk flag.
The two stock stories I am most focused on this week: NVDA touched an all-time high near $237.88 and pushed its market cap past $5.7 trillion. I trimmed a bit into that strength. It is still my largest position by a wide margin, but I have been saying for weeks I was too concentrated and I am finally acting on it. The other name is Micron, which reported a record $54.2 billion quarter with guidance that beat across the board. MU has been on my watchlist and this print makes it a more serious conversation. It is a solid AI-linked semiconductor name with a very different valuation story than NVDA at these levels.
Oil whipsawed this week. WTI hit $94.74 mid-week before a reported G7 coordinated reserve release knocked it back to close around $91. The geopolitical premium is still baked in. Combined with ISM manufacturing prices paid jumping to 77.9, inflation is not dead yet even if the labor market is clearly softening. The Fed is threading a very tight needle and this week did not make it any easier for them. I am heading into next week still carrying more cash than I would like, but a lot more comfortable with the direction of my positioning than I was a month ago.
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