The Dow Jones Industrial Average (Dow) fell 1.3 percent, the Standard & Poor’s 500 Index (S&P 500) lost 0.3 percent, and the Nasdaq Composite Index (Nasdaq) gained 0.5 percent for the week ending Oct. 2. Sector breadth was negative, with eight of the S&P sector groups closing lower and three closing higher. The technology sector (1.4 percent) was the strongest performer while the healthcare sector (-2.7 percent) was the weakest.

*See below for Index Definitions

Market Observations: 9.28.2026–10.2.2026

The S&P 500 finished the week modestly lower after the benchmark 10-year Treasury yield rose to 5.34 percent during the week, its highest level in 24 years. After falling to 3.94 percent in late February, yields—which rise when bond prices fall—have climbed amid expectations for strong economic growth, surging energy costs that are driving up inflation expectations, and increased competition for capital as companies issue debt to fund AI expansions. Despite recent choppy trading, the S&P 500 sits less than 1 percent below its all-time high reached on mid-August as strong corporate earnings have countered worries over inflation and higher rates.

Fedspeak—Patience: Federal Reserve (Fed) Vice Chair Jefferson policymakers may need more time to judge whether further interest-rate increases are needed to slow inflation. Jefferson warned that inflation has been too high for too long and could remain elevated. Yet he also said he and his colleagues are juggling a series of economic shocks and will need to carefully assess incoming data before they decide on their next move. Separately, New York Fed President Williams said there was no urgency in considering another rate increase following the Fed’s September hike, though one more increase “late this year” may be appropriate to help contain inflation. Their comments prompted investors to dial back expectations for an increase at the next meeting, with the probability of an October hike ending the week at just over 20 percent.

Labor Market: On Friday, the Labor Department reported that nonfarm payrolls expanded by 29,000 in September, well below the 90,000 economists expected. Job growth in the prior two months was also revised lower by 60,000. The unemployment rate rose to 4.2 percent from 4.1 percent in the prior month. Despite the shortfall, the equity market rallied sharply as investors embraced signs of a cooling labor market, suggesting less urgency for the Fed to raise interest rates at this month’s meeting. After the release of the data, Bloomberg’s World Interest Rate Probability tool showed around 20 percent odds the Federal Open Market Committee (FOMC) will hike rates at its next meeting, concluding on October 28—a sharp drop from the 70 percent probability at the start of the week. In other labor related news, applications for U.S. unemployment benefits edged down to the lowest level since July, while continuing claims dropped to a three-year low, indicating healthy labor-market conditions.

Q3 Earnings Season on Deck: Following much stronger than expected second quarter results, analysts expect S&P 500 companies to grow earnings by more than 29 percent from year-ago levels. According to FactSet data, all eleven S&P sector groups are forecast to deliver positive earnings, with the strongest results in energy (+114 percent), technology (+65 percent), and communication services (+52 percent). If achieved, it would mark the third consecutive quarter of earnings growth above 25 percent and the eighth consecutive quarter of double-digit growth.

Economic Roundup: The Federal Reserve’s preferred measure of underlying inflation, the Personal Consumption Expenditures Price Index excluding food and energy, rose by 0.2 percent from the prior month and 3.0 percent from a year earlier. While both figures were better than economist’s expectations, the core PCE reading remains well above the Fed’s 2 percent target. Meanwhile, the final revision to second quarter gross domestic product data showed the economy advancing by a 2.2 annual rate, up from a previously reported 1.5 percent. The upward revision reflected higher investment, consumer spending, and government outlays, with consumer spending rising at the fastest pace since the end of 2024. Elsewhere, consumer confidence fell in September to its lowest level since 2014 as views about the economy and the labor market deteriorated. The Conference Board’s gauge of confidence fell 6.7 points to 81.9 after a downward revision to the prior month’s reading. Lastly, U.S. manufacturing activity expanded at a slightly slower pace in September as factories balanced robust demand with resurgent costs and shipping delays. The Institute for Supply Management’s manufacturing gauge fell 0.1 point to 54.5. Factory activity has been in expansionary territory, or over 50, for nine consecutive months, the longest stretch since 2022.

The Week Ahead: Notable economic indicators this week ahead include the September ISM services index (Monday) and the October University of Michigan survey (Friday). Investors will also parse the FOMC minutes on Wednesday to get more insights behind the Fed’s first rate hike in more than three years. On the earnings front, just three members of the S&P 500 are scheduled to release quarterly results, notably PepsiCo and Delta Airlines. In terms of the Fed speaking calendar, five members of the central bank are scheduled to make presentations throughout the week.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since Oct. 1, 1928.

Standard and Poor’s 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of Feb. 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC, or its subsidiaries. The opinions contained herein are subject to change without notice. Forward-looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.

Investing involves risk, including the possible loss of principal.

Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Wealth Solutions, LLC, Guggenheim Private Investments, LLC, Guggenheim Investments Loan Advisors, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, and GS GAMMA Advisors, LLC.

©2026 Guggenheim Investments. All rights reserved. #5988048