Three weeks of good news ended on Friday. September payrolls came in at 29,000 against an 84,000 consensus, unemployment rose to 4.2%, and the BLS cut July and August by a combined 60,000. Futures priced the October 28 hike out immediately, with CME FedWatch near 17% against 36% a week earlier. The 10-year touched 5.342% on Thursday and the 30-year 5.683%, both the highest in more than two decades, before settling at 5.18% and 5.57%.
Equities took the news as a gift and still lost ground. The S&P 500 closed at 7,722.77, down 0.3% on the week after four straight closes below 7,700. The Dow fell 1.3% to 51,176.96. The Nasdaq rose 0.5% to 27,190.86, setting an intraday record of 27,353.68 and finishing 53 points shy of its September 22 record close. August core PCE landed at 3.0% on Wednesday, under the 3.2% Chair Warsh guided to.
Scorecard: September 28
Seven rows. Three right, three wrong, one split.
- August core PCE at 3.2% or lower. Right. 3.0%, with July revised down from 3.3%. A caveat belongs in the win: the BEA changed how it prices legal services, software, and portfolio management, applied back five years. Part of that disinflation was arithmetic.
- Payrolls above the 90,000 consensus with unemployment at 4.1%. Wrong on both legs, and badly. 29,000 and 4.2%.
- 10-year weekly close below 5.30%. Right. Thursday's 5.342% broke it intraday. Friday's 5.18% settle put it back with room.
- Micron revenue above $51 billion and a November guide above $55 billion. Right on both, widely. $54.23 billion and $61.5 billion.
- S&P 500 holds 7,700 on a closing basis. Wrong. It closed 7,683.69, 7,670.84, 7,651.54, and 7,666.45 Monday through Thursday. Friday rescued the week, not the level.
- Nasdaq retakes the 27,244.28 record close by Friday. Wrong by 53 points. It took the intraday record instead and gave it back into the close.
- Bitcoin holds $80,000 and the ETF inflow streak survives. Half right. Bitcoin closed at $84,504, but Wednesday brought $148.7 million of net outflows and the week netted $82.9 million against $2.39 billion the week before.
The payroll miss was conceptual rather than numerical. For two months this column read 197,000 jobless claims as proof of labor strength. Claims measure firing, and low claims in a hiring freeze look identical to low claims in a boom. The revisions say the freeze started in July.
The October Hike Died. The Inflation Problem Did Not.
Friday killed the hike and fixed nothing. On Thursday the ISM manufacturing prices paid index printed 77.9 while the headline held at 54.5 and backlogs jumped 4.6 points to 56.4, a sector carrying demand and cost pressure at once. Two days earlier the third estimate put second quarter GDP at 2.2%, revised up seven tenths. The labor data argues with itself too: ADP counted 90,000 private jobs against a 68,000 consensus, the BLS 29,000 in total.
So this is not easing. It is a hot price level on a cold hiring picture, the one combination a single lever does not solve. Wednesday's minutes say how much of September's vote was conviction and how much was insurance. December futures still carry a hike, and they should. A committee that reads 3.0% core PCE as partly a measurement change, and 77.9 prices paid as real, keeps December live.
Micron Printed the Best Quarter in Memory History and Got Sold
Micron's fiscal fourth quarter was not a beat so much as a different category of company. Revenue of $54.23 billion against $11.32 billion a year ago, adjusted earnings of $33.42 a share against $3.03, DRAM revenue up 343%, gross margin near 87%. The November quarter is guided to roughly $61.5 billion and $38.15 per share.
The stock fell, closing Friday at $1,074.89, down 2.05%. The reason is the capital plan: roughly $25 billion of capex across the first half of fiscal 2027, most of it cleanroom construction. The September 28 column said an aggressive 2027 build gets the print sold however good the quarter was. That is exactly what happened, a correct framework and an uncomfortable one.
It is still not a sell. Management says supply stays tight through fiscal 2027 and 2028, Samsung and SK Hynix have said the same, and server DRAM contract pricing is up on the order of 130% across two quarters. Cleanrooms funded in 2027 ship wafers in 2029, so the capex line starts a clock rather than ending the trade.
Twenty-Eight Stocks Are the Market
The index was flat and the average stock was not. Through the October 1 close, 28 stocks account for the entire S&P 500 return for 2026, and AI hardware alone delivered 58% of it. The median S&P 500 stock fell about 0.9% while the Nasdaq rose. The Dow's 1.3% loss against the Nasdaq's 0.5% gain is that fact told twice.
Chip and chip equipment names added roughly $350 billion of market value in five sessions: Applied Materials up 11.4%, Lam Research 10.2%, KLA 10.1%. Nvidia gained about 4% to $233.95 after Monday's authorization lifted total buybacks to $235 billion, the largest single increase in US corporate history. Meta added roughly 13% on Muse while Apple slipped 0.7%. Accenture jumped more than 20% on Thursday, its best day on record, on revenue of $18.68 billion against $18.03 billion expected.
That is the cleanest read yet that enterprises still pay for AI work. Breadth this narrow is not a reason to leave, but it is a reason to know what is owned: an index carried by 28 names reprices on one miss from any of them.
This Week
- Monday: ISM services, consensus 55.7 against 55.4. After Thursday's 77.9, the prices paid line matters more than the headline.
- Wednesday: minutes from the September meeting, the first hike since 2023 on a 12 to 0 vote. How many wanted to signal October, and what was said about oil passing through to core. No CPI this week, so the minutes carry it.
- Thursday: jobless claims and PepsiCo, consensus near $2.30 on $25 billion. Claims at 197,000 have been the entire bull case for labor. If they hold there with payrolls at 29,000, this is a freeze rather than a downturn, and the two price differently.
- Friday: Delta before the open, a discretionary travel read with Brent at $102.25, and preliminary Michigan sentiment at 48.1.
- Bitcoin. $84,504 on Friday, but weekly ETF flows fell from $2.39 billion to $82.9 million. Price held and the bid thinned. The $150,000 call stands, retired only on a weekly close below $55,000.
Key Levels for the Week
| ISM services on Monday | Headline above 55.0, prices paid below 75 |
| October 28 hike odds after Wednesday's minutes | Stay below 30% |
| 10-year yield, weekly close | Below 5.30%, and below 5.10% on claims above 210,000 |
| Jobless claims on Thursday | Rise above 210,000 from 197,000 |
| S&P 500, on a closing basis | Reclaims 7,743 and holds 7,650 |
| Nasdaq | Takes out the 27,244.28 record close by Friday |
| Micron after the capex guide | Holds $1,000 |
My Take
The regime changed on Friday and the label most people reached for is wrong. For three weeks good data pushed yields up and equities shrugged. Now weak labor data is pushing yields down and equities are rallying, and the reflex is to call that easing. It is not. Core PCE at 3.0% leaned on a methodology revision, prices paid sit at 77.9, Brent is above $100, and GDP was revised up to 2.2%. What died was the October hike, not the problem behind it.
Playbook: stay with memory and with chips that generate cash now, and read Micron's $25 billion first half capex as a clock rather than a sell signal, because the supply it funds does not ship until 2029; buy the 10-year between 5.25% and 5.35% rather than at 5.18%, since the hold is priced and December is not; keep Nvidia at BUY with the $268 target after a week that left it at $233.95 with a $235 billion buyback underneath it; treat the 0.9% drop in the median S&P 500 stock as the real risk, because 28 names carrying an index year is a breadth problem one payroll print does not repair; hold banks through Wednesday's minutes and fade any rate-cut narrative that starts in that text; and hold Bitcoin above $80,000 while watching flows rather than price.