STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking & Eric Criscuolo
Published on 10/2/26 (a/o 9:00 am)
Happy Friday,
Yesterday was the first trading session of Q4 and after a choppy start US indices ended in the green. As often happens at the start of the quarter rebalancing flows drove much of the trading. Early on it looked like a continuation of September. Tech was holding up the S&P 500 following some positive news flow including strong Micron earnings, Alphabet releasing its new Gemini model, Argo, and Oracle signing a deal to lease 100k AI chips to Tencent. Oil prices continued to move higher with no end to the conflict in sight. The economic data pointed to a solid labor market and growth but accompanied by hot inflation. Yields were on the move higher again, but Treasuries finally caught a bid shortly after the open. In mechanical fashion, tech pulled back from the morning highs while the equal-weight and small/mid-caps started to bounce, the opposite of the flows we (and everyone else) have been highlighting ad nauseum over the last month and change. With yields continuing to move lower throughout the day breadth improved dramatically. In the afternoon the WSJ reported that the US had sent a third aircraft carrier to the Middle East and President Trump was planning on resuming bombing in November. Oil took another leg higher but the impact on bonds and equity were muted. The S&P 500 closed The S&P 500 closed up ~0.2% while the equal-weight and S&P 400/600 were all up between 0.5% - 1%.
US futures were trading up ~0.5% ahead of this morning’s jobs report as oil prices pulled back and amidst a slew of tech headlines. Oil prices are giving up about half of yesterday’s gains down ~3% amidst discussions of EU releasing emergency diesel stockpiles, reports of more flows moving through the Strait and fading hopes for a deal. Yields were only down a couple of bps but moved lower after this morning’s jobs report came in below expectations. 29k jobs were added to the economy below the 90k estimate while there was also a negative revision of 60k over the last two months, leaving the 3mo average is ~50k jobs. Private sector hiring was 46k with healthcare and social assistance accounting for half of that while government fell 17k. The household survey was very strong showing an increase of 406k. However, despite those gains the unemployment rate ticked up to 4.2% as the labor force participation rate improved to 61.8% from 61.6%. The workweek held steady at 34.4 slightly better than expectations. Average hourly earnings came in 0.2% below expectations at 0.1%/3% m.m/y.y this will further pressure the consumer. Yields are now down between 5 - 8bps across the curve. Equity futures have extended to the upside with the S&P 500 up just under 1% while the Russell is up ~1.5%.
On the tech front there are reports that Anthropic is looking to IPO before Thanksgiving. Broadcom (+.1%) and its Wall Street syndicate are working on a $60B financing for chips for Anthropic and others. Amazon (+0.5%) is looking to move $8B off Nvidia chips off its balance sheet into an SPV and then lease them back. Speaking of Nvidia (+2%) the stock was upgraded by Morgan Stanley on agentic driven CPU demand and is testing its YTD high hit back in May ~236. On Semi (+>5%) is trading sharply higher after recutting its deal to buy Synaptics to all-cash. WDC and STX are trading sharply lower on reports that Toshiba is looking to double HDD production next year. Outside of tech corporate news flow is pretty light. Nike (->5%) is hitting new lows after its earnings missed expectations.
After strong gains yesterday the Nikkei fell ~1% overnight with broad weakness, taking the week’s gain to ~3%. Tokyo CPI was hotter than expected and unemployment ticked higher. Yen was modestly stronger against the dollar with JGBs rising ~3bp in the long-end. Monetary rhetoric continues to highlight Japan’s pivot to mitigating inflation and addressing yen weakness. Mainland China was closed for a holiday but Hong Kong fell 2.6% with tech stocks under pressure (Tencent, Alibaba, Xiamoi down 2-3%) as the Hang Seng Tech index hit a two-year low. European equities are getting back some of yesterday’s losses, with Germany outperforming as yields move significantly lower, down 10bp across the curve. Most sectors are higher, though Financials are mixed to lower. Volvo Car is down ~7% after saying it wouldn’t hit its previous guidance, due mostly to deteriorating conditions in China and slower US market. Headline European inflation rose from last month and was higher than expected while core was inline.
Crude oil is down ~3%, well off its overnight high as December trades just under $100. Markets are weighing the possibility of crude and diesel stockpile releases. Nat gas is lower as well. Meanwhile the geopolitical tensions seem to be ratcheting back up with the US sending a third carrier group and second Marine division to the Mid East and Putin tells his military to “abandon the rules of war” according to the FT. Precious metals were slightly higher pre-jobs data but jumped on the release. Crypto is higher with Bitcoin and Ether up ~2% approaching the late September highs again. The coins also jumped on the data initially but have pulled back towards prior levels.
Earnings
After-Market: NKE
Pre-Market: None
Economic Data:
US:
Yesterday was the first trading session of Q4 and after a choppy start US indices ended in the green. As often happens at the start of the quarter rebalancing flows drove much of the trading. Early on it looked like a continuation of September. Tech was holding up the S&P 500 following some positive news flow including strong Micron earnings, Alphabet releasing its new Gemini model, Argo, and Oracle signing a deal to lease 100k AI chips to Tencent. Oil prices continued to move higher with no end to the conflict in sight. The economic data pointed to a solid labor market and growth but accompanied by hot inflation. Yields were on the move higher again, but Treasuries finally caught a bid shortly after the open. In mechanical fashion, tech pulled back from the morning highs while the equal-weight and small/mid-caps started to bounce, the opposite of the flows we (and everyone else) have been highlighting ad nauseum over the last month and change. With yields continuing to move lower throughout the day breadth improved dramatically. In the afternoon the WSJ reported that the US had sent a third aircraft carrier to the Middle East and President Trump was planning on resuming bombing in November. Oil took another leg higher but the impact on bonds and equity were muted. The S&P 500 closed The S&P 500 closed up ~0.2% while the equal-weight and S&P 400/600 were all up between 0.5% - 1%.
US futures were trading up ~0.5% ahead of this morning’s jobs report as oil prices pulled back and amidst a slew of tech headlines. Oil prices are giving up about half of yesterday’s gains down ~3% amidst discussions of EU releasing emergency diesel stockpiles, reports of more flows moving through the Strait and fading hopes for a deal. Yields were only down a couple of bps but moved lower after this morning’s jobs report came in below expectations. 29k jobs were added to the economy below the 90k estimate while there was also a negative revision of 60k over the last two months, leaving the 3mo average is ~50k jobs. Private sector hiring was 46k with healthcare and social assistance accounting for half of that while government fell 17k. The household survey was very strong showing an increase of 406k. However, despite those gains the unemployment rate ticked up to 4.2% as the labor force participation rate improved to 61.8% from 61.6%. The workweek held steady at 34.4 slightly better than expectations. Average hourly earnings came in 0.2% below expectations at 0.1%/3% m.m/y.y this will further pressure the consumer. Yields are now down between 5 - 8bps across the curve. Equity futures have extended to the upside with the S&P 500 up just under 1% while the Russell is up ~1.5%.
- US 2yr -6bps to 4.73%, 5yr -7bps to 4.94%, 10yr -5bps to 5.19%, 30yr -4bps to 5.58%
- USD index: -$0.24 to $101.64
On the tech front there are reports that Anthropic is looking to IPO before Thanksgiving. Broadcom (+.1%) and its Wall Street syndicate are working on a $60B financing for chips for Anthropic and others. Amazon (+0.5%) is looking to move $8B off Nvidia chips off its balance sheet into an SPV and then lease them back. Speaking of Nvidia (+2%) the stock was upgraded by Morgan Stanley on agentic driven CPU demand and is testing its YTD high hit back in May ~236. On Semi (+>5%) is trading sharply higher after recutting its deal to buy Synaptics to all-cash. WDC and STX are trading sharply lower on reports that Toshiba is looking to double HDD production next year. Outside of tech corporate news flow is pretty light. Nike (->5%) is hitting new lows after its earnings missed expectations.
After strong gains yesterday the Nikkei fell ~1% overnight with broad weakness, taking the week’s gain to ~3%. Tokyo CPI was hotter than expected and unemployment ticked higher. Yen was modestly stronger against the dollar with JGBs rising ~3bp in the long-end. Monetary rhetoric continues to highlight Japan’s pivot to mitigating inflation and addressing yen weakness. Mainland China was closed for a holiday but Hong Kong fell 2.6% with tech stocks under pressure (Tencent, Alibaba, Xiamoi down 2-3%) as the Hang Seng Tech index hit a two-year low. European equities are getting back some of yesterday’s losses, with Germany outperforming as yields move significantly lower, down 10bp across the curve. Most sectors are higher, though Financials are mixed to lower. Volvo Car is down ~7% after saying it wouldn’t hit its previous guidance, due mostly to deteriorating conditions in China and slower US market. Headline European inflation rose from last month and was higher than expected while core was inline.
Crude oil is down ~3%, well off its overnight high as December trades just under $100. Markets are weighing the possibility of crude and diesel stockpile releases. Nat gas is lower as well. Meanwhile the geopolitical tensions seem to be ratcheting back up with the US sending a third carrier group and second Marine division to the Mid East and Putin tells his military to “abandon the rules of war” according to the FT. Precious metals were slightly higher pre-jobs data but jumped on the release. Crypto is higher with Bitcoin and Ether up ~2% approaching the late September highs again. The coins also jumped on the data initially but have pulled back towards prior levels.
Earnings
After-Market: NKE
Pre-Market: None
Economic Data:
US:
- Nonfarm payrolls: 29k vs 90k cons, prior 133K (revised down from 162k)
- Unemployment rate: 4.2% vs 4.1% cons, prior 4.1%
- Participation rate: 61.8% vs prior 61.6%
- 10:00am Factory Orders
- 10:00am Fed Logan speech
- Korea inflation: 2.9% vs 2.9% cons, prior 3.1%
- Japan Tokyo CPI: 2.7% vs 2.5% cons, prior 1.9%
- Core: 2.7% vs 2.3% cons, prior 1.8%
- Japan Unemployment: 2.5% vs 2.4% cons, prior 2.4%
- EU flash CPI y.y: 3.8% vs 3.6% cons, prior 3.2%
- Core: 2.5% vs 2.5% cons, prior 2.4%
- Moving On!
- Rebalancing flows & Seasonality
- Data hot but yields fall
- Oil moving higher
- Check out some of the recent ICE Data/Content:
- Inside the ICE House
- Episode 556: Blue Yonder CSO Saskia van Gendt on Sustainability as a Supply Chain Superpower
- ETF Central: ETF Focus Partners Wealth Senior Wealth Advisor Adam Yofan
- NYSE Research Insights: Behind the Record Volumes: A Hidden Opportunity
- ICE Mortgage Monitor: Property Insurance Costs Rise 8.7% Annually, but Rate of Growth Is Sharply Slowing
- Market Storylines
MAC Desk Commentary:
We flip the calendar and hit the home stretch for 2026. With September officially in the books, we move on to October, the month where legends are made. Speaking of, the Yankees went Bachman Turner Overdrive last night, Taking Care of Business against the Red Sox and moving on to face the Rays. We also say goodbye to Artificial Intelligence and Hello to Super Intelligence, codified in an executive order. Ahead of first pitch, the S&P fell 0.3% on the last day of the month/quarter, while the equal-weight dropped 0.7% and Russell 2000 fell 0.4%. Equites were holding up but sold off in the last half hour of the day as the month/quarter end rebalancing flows kicked in. That late day selloff actually flipped the S&P 500 negative for the month of September closing down 0.5% but that papers over the 5% decline in the equal-weight and similar declines in small/mid cap indices. Equities had to navigate the surge in yields as rates climbed 40-50bp across the curve, along with sharply higher crude prices. For Q3 the S&P rose 2.0% while the equal-weight and Russell fell ~2%. Energy led in Q3 while the rate-sensitive Utilities- which are increasingly dragged into AI/SI build-out tensions, lagged, along with Industrials.
As we move into October we also officially exit some of the historical seasonal headwinds during Mid-Term Election years and the 4-year Presidential cycle with a much more favorable backdrop looking forward (see data below).
That being said, this is not to suggest that it’s all smooth sailing. Citadel’s Scott Rubner, highlighted that in midterm election years going back through 1930 (longer data set than ours) the Q4 low was only set at the start of the quarter in 4 of 24 instances, while the low has been set in October more than half the time. The median rally from that low into year end has been around 10%.
As often happens the start of the quarter has gotten off to a choppy start, and it feels like rebalancing flows are driving much of the trading. Early on it looked like a continuation of September. Tech was holding up the S&P 500 following some positive news flow including strong Micron earnings, Alphabet releasing its new Gemini model, Argo and Oracle signing a deal to lease 100k AI chips to Tencent. Oil prices continued to move higher with no end to the conflict in sight. The economic data continued to point to a solid labor market and growth but accompanied by hot inflation. Yields were on the move higher but Treasuries finally caught a bid shortly after the open. In mechanical fashion, tech pulled back from the morning highs while the equal-weight and small/mid-caps started to bounce, the opposite of the flows we (and everyone else) have been highlighting ad nauseum over the last month and change. With yields continuing to move lower throughout the day breadth has improved dramatically. However, as we were putting the finishing touches on today’s note the WSJ reported that the US had sent a third aircraft carrier to the region and President Trump was planning on resuming bombing in November, which sent oil higher, yields have started to come off the lows while equities have pulled back from the highs.
Energy is leading to the upside. Info tech is up ~1% we mentioned some of the catalysts above. Accenture had strong earnings which has sent the stock sharply higher and pulled the IT Service group up with it. Industrials are up a similar amount with the AI infrastructure exposed companies leading to the upside. Healthcare is down >1% with broad based weakness. Materials and REITs are both down just under 1%. Financials were a significant underperformer early but have improved significantly during the session.
Quickly looking at the economic data ahead of the open the claims data was slightly better than expected with initial claims remaining below 2k and continuing claims approaching 1.7ml, a level that has not been broken since 2023. After the open the ISM manufacturing survey held steady from last month firmly in growth territory. New orders and employment both improved modestly, though production moderated given supply chain issues but most notably prices jumped sharply.
The Brent Dec contract is back above $100 and prices have moved up an additional $2 since the headlines. Metals are mixed with precious metals modestly higher but copper is pulling back. Ag is mostly lower with corn adding to yesterday’s losses. Crypto has moved higher since the open. Bitcoin is testing 85k again.
Global tech stocks saw sharp gains overnight following Micron’s earnings. Japan ripped to start October as the Nikkei rose over 3% with the big tech names leading: Kioxia +6%, Advantest +10%, Tokyo Electron +6%. Electric motors maker Nidec continued to be under pressure, falling over 10% as the company weathers accounting issues. China was closed for a holiday. Korean exports rose sharply as exports continue to surge. After earlier reports saying SK Hynix was looking to list its solid-state drives (SSD) unit Solidigm, the company said it has yet to make a decision. Yesterday Commerce Secretary Lutnick announced a ~$50B investment by the South Korean government into an LNG pipeline in Alaska. However overnight, South Korean officials said the comments went “far beyond what was agreed to.” Australia was a notable laggard in the region. European equities were under pressure with major indices closing down 1% or more, while US markets were at the lows. . Financials are the main underperformers, with multiple large banks down 2%. Consumer goods also lagging. In the UK, new PM Burnham discussed closer ties with the EU, including the possibility of returning to the bloc, though it’s not something that would happen anytime soon. In France the government proposed cost cuts in its new budget proposal, but this has not helped the widening of spreads relative to Germany.
The focus tomorrow will be on the BLS Employment report.
Earnings
After-Market: NKE
Economic Data:
US:
- Jobless claims: 197K vs 200K cons, prior 198K
- Continuing Claims: 1701K vs 1730K cons, prior 1712K
- ISM Manufacturing: 54.6 vs. 54.6 cons., prior 55
- Construction Spending: 0.9% vs. 0% cons., prior -0.1%
- Fed Speakers: Barkin, Collins, Schmid, Williams, Logan (AMC)
Global:
- Final Manufacturing PMIs
- Japan Tankan large manufacturers survey: 24 vs 25 cons, prior 22
- Japan final Manufacturing PMI: 54.1 vs flash 54.1
- Japan Tankan 1 / 5y inflation expectations: 2.6% / 2.5% vs prior 2.7% / 2.6%
- Korea Exports y.y: 83.5% vs 61.7% cons, prior 68.7%
- UK Home prices y.y: 0.8% vs 1.3% cons, prior 1.6%
- EU Unemployment: 6.4% vs 6.4% cons, prior 6.4%
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