Overview
U.S. stocks ended higher after weaker September employment data reduced expectations for another Federal Reserve rate increase in October, with technology shares leading the advance.
The Nasdaq Composite gained 1.19% to 27,190.86 on Oct. 2, finishing close to its record. The S&P 500 rose 0.73% to 7,722.72 and the Dow Jones Industrial Average added 0.49% to 51,176.96. The Russell 2000 climbed 0.9% to 2,832.90.
The move followed a U.S. Bureau of Labor Statistics report showing nonfarm payrolls increased by 29,000 in September. The unemployment rate held near 4.2%, while hiring across major industries changed little during the month.
Economists polled by Reuters had expected payroll growth of around 90,000. Futures markets responded by sharply reducing expectations for an October Fed rate increase, giving equity investors some relief after Treasury yields reached multi-decade highs earlier in the week.
Technology retains market leadership
Semiconductors were already supporting the U.S. market when 2026 began, and AI-related demand remains a major source of strength nine months later.
- Nvidia reached a record high during Friday’s session as technology stocks advanced following the employment report. Other semiconductor names also gained, extending a year in which AI infrastructure spending has kept investor attention firmly on chips.
- Micron Technology added another reason for investors to stay interested in the sector this week. The memory-chip producer forecast first-quarter revenue of $61.5 bn, plus or minus $1.5 bn, above the $57.02 bn analyst estimate compiled by LSEG. Customer commitments under long-term supply agreements increased to $32 bn from $22 bn in June.
Micron’s revenue reached $54.23 bn in its latest quarter, above analyst expectations of $51.07 bn. The company also said most of its 2027 high-bandwidth memory output is already covered by customer agreements as demand from AI data centers continues to absorb available capacity.
Investor money has followed the AI trade. U.S. equity funds attracted $20.6 bn during the week through Sept. 30, marking a second consecutive weekly inflow. Large-cap funds received $19.33 bn, their second-largest weekly inflow during the previous three months.
Nasdaq leads U.S. indexes in 2026
The market looks different from its cautious opening in January. The Nasdaq is up 17% through Oct. 2, ahead of the S&P 500’s 12.8% increase, the Russell 2000’s 14.1% gain and the Dow’s 6.5% advance.
Those figures leave technology-heavy Nasdaq ahead among the major U.S. indexes despite repeated concerns over AI valuations, rising bond yields and the durability of capital spending on data centers.
The gains haven’t been uniform. The S&P 500 finished the latest week down 0.3%, while the Dow lost 1.3%. The Nasdaq rose 0.5% for the week and the Russell 2000 slipped 0.2%, showing how individual sessions driven by economic data don’t necessarily translate into broad weekly gains.
Friday also produced sharp differences inside technology. Seagate Technology and Western Digital each fell around 10% following reports of additional hard-drive production capacity from Toshiba, even as Nvidia and other AI-related shares moved higher.
Rate expectations move back into focus
The employment report changed the immediate discussion around Federal Reserve policy. Chicago Fed President Austan Goolsbee said both another rate increase and a pause remain under consideration, with inflation still above the central bank’s target.
Treasury yields initially declined after the payroll figures before reversing part of the move later Friday. Earlier in the week, the 10-year Treasury yield reached 5.34%, its highest level in 24 years, putting renewed pressure on equity valuations.
For U.S. stocks, the first nine months of 2026 have left the market well above where it started the year. Semiconductor strength from January has persisted, AI spending remains a major source of investor demand and Nasdaq has outpaced the other major indexes. The latest jobs report added another factor by reducing near-term expectations for tighter monetary policy.
