Stocks Finish Higher as Bond Yields Slip and Chip Makers Climb

The S&P 500 Index ($SPX) (SPY) closed up +0.26% on Monday, while the Dow Jones Industrials Index ($DOWI) (DIA) saw a rise of +0.15%. The Nasdaq 100 Index ($IUXX) (QQQ) gained +0.44%. Additionally, December E-mini S&P futures (ESZ25) rose by +0.24%, and December E-mini Nasdaq futures (NQZ25) increased by +0.42%.

<p>On Monday, stock indexes settled higher as the broader market experienced gains and bond yields fell. This shift was fueled by growing optimism that weak US labor market news this week—including the August JOLTS job openings, the September ADP employment change, and the September nonfarm payrolls—would encourage the Federal Reserve to continue cutting interest rates. The yield on the 10-year T-note dropped by -3 basis points to 4.14%.</p>

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<p>Currently, stock indexes are in the midst of a 5.5-month-long rally that has propelled the S&amp;P 500, Dow Jones Industrial Average, and Nasdaq 100 to record highs. This surge is attributed to strong earnings growth, the Fed’s easing measures without triggering a recession, and global fiscal policy easing. Stocks continued their upward trajectory on Monday, bolstered by a surprising rise in US August pending home sales, which increased by +4.0% month-over-month, significantly surpassing expectations of +0.4%.</p>

<p>Chipmakers led the technology sector higher on Monday, although weakness in energy producers tempered overall market gains after WTI crude oil prices plummeted by more than -3%.</p>

<p>The price of COMEX gold (<a target="_blank" href="https://www.barchart.com/futures/quotes/GC*0/overview" rel="nofollow">GCZ25</a>) surged over 1% on Monday, reaching a record above $3,800 an ounce. This increase was driven by expectations of further Fed easing, uncertainties surrounding US tariffs, and the heightened risk of a US government shutdown.</p>

<p>In economic news, the US September Dallas Fed manufacturing activity survey unexpectedly fell by -6.9 to -8.7, which was weaker than the anticipated increase to -1.0. Fed comments on Monday were mixed; New York Fed President John Williams noted that inflation risks have receded, suggesting it may be prudent for the Fed to lower interest rates. Conversely, Cleveland Fed President Beth Hammack expressed concerns that inflation would not return to the Fed’s 2% target until late 2027 or early 2028, advocating for a continued restrictive policy stance.</p>

<p>A looming concern for market sentiment is the potential US government shutdown on Wednesday if lawmakers fail to pass a spending bill or continuing resolution. Congressional leaders are set to meet with President Trump to negotiate a short-term spending bill, with the White House warning that a shutdown could lead to widespread employee dismissals in government programs not aligned with Trump’s priorities.</p>

<p>Rising corporate earnings expectations provide a bullish backdrop for stocks. According to Bloomberg Intelligence, over 22% of S&amp;P 500 companies have issued guidance for Q3 earnings that are expected to exceed analysts’ expectations, marking the highest rate in a year. Additionally, S&amp;P companies are projected to achieve +6.9% earnings growth in Q3, up from +6.7% at the end of May.</p>

<p>The markets are currently pricing in an 89% chance of a -25 basis point rate cut at the next FOMC meeting scheduled for October 28-29.</p>

<p>This week, market focus will be on any new trade or tariff developments. On Tuesday, the September MNI Chicago PMI is expected to rise by +1.8 to 43.3, while August JOLTS job openings are anticipated to decrease by -11,000 to 7.170 million. The Conference Board’s September consumer confidence index is projected to fall by -1.4 to 96.0. On Wednesday, the September ADP employment change is expected to increase by +50,000, and the September ISM manufacturing index is forecasted to rise by +0.3 to 49.0. On Thursday, weekly initial unemployment claims are expected to increase by +7,000 to 225,000, with August factory orders anticipated to rise by +1.4% month-over-month. Finally, on Friday, September nonfarm payrolls are expected to increase by +50,000, with the unemployment rate remaining unchanged at 4.3%. Average hourly earnings are expected to rise by +0.3% month-over-month and +3.7% year-over-year, while the September ISM services index is projected to slip by -0.3 to 51.7.</p>

<p>Overseas stock markets on Monday exhibited mixed results. The Euro Stoxx 50 climbed to a 6.75-month high, closing up +0.13%. China’s Shanghai Composite rose to a 1-week high, gaining +0.90%, while Japan’s Nikkei Stock 225 fell to a 1-week low, closing down -0.69%.</p>

<p><strong>Interest Rates</strong></p>
<p>December 10-year T-notes (<a target="_blank" href="https://www.barchart.com/futures/quotes/ZN*0/overview" rel="nofollow">ZNZ5</a>) closed up +8 ticks on Monday, with the 10-year T-note yield falling -3.7 basis points to 4.139%. T-notes rose on expectations that this week’s US labor market news will reveal weakness, allowing the Fed to continue cutting interest rates. The -3% drop in WTI crude oil prices also lowered inflation expectations, supporting Fed policy and T-note prices, as the 10-year breakeven inflation rate fell to a 1.5-week low of 2.357%. However, T-notes retreated from their peak after Cleveland Fed President Beth Hammack reiterated concerns about inflation and opposed further Fed rate cuts.</p>

<p>European government bond yields declined on Monday, with the 10-year German bund yield falling to a 1-week low of 2.706%, finishing down -3.8 basis points at 2.707%. The 10-year UK gilt yield also decreased by -4.6 basis points to 4.700%.</p>

<p>In economic news, Eurozone September economic confidence unexpectedly rose by +0.2 to 95.5, surpassing expectations of 95.3. ECB Governing Council member Makhlouf stated that the ECB is “near the bottom” of its rate-cutting cycle, emphasizing the need for vigilance as the full impact of US tariffs is yet to be felt in EU imports.</p>

<p>Swaps are currently pricing in a 1% chance of a -25 basis point rate cut by the ECB at its next policy meeting on October 30.</p>

<p><strong>US Stock Movers</strong></p>
<p>Chipmakers experienced gains on Monday, boosting the overall market. GlobalFoundries (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/gfs" rel="nofollow">GFS</a>) and Micron Technology (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/mu" rel="nofollow">MU</a>) both closed up more than +3%. Lam Research (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/lrcx" rel="nofollow">LRCX</a>) saw a rise of over +2% after Deutsche Bank upgraded the stock to buy from hold, setting a price target of $150. Nvidia (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/nvda" rel="nofollow">NVDA</a>) also led gainers in the Dow Jones Industrials with a rise of more than +1%. Advanced Micro Devices (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/amd" rel="nofollow">AMD</a>) and ASML Holding NV (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/asml" rel="nofollow">ASML</a>) both closed up more than +1%.</p>

<p>Conversely, energy producers and service providers retreated on Monday following a more than 3% drop in WTI crude oil prices. Diamondback Energy (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/fang" rel="nofollow">FANG</a>) and Devon Energy (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/dvn" rel="nofollow">DVN</a>) both closed down more than -3%. Chevron (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/cvx" rel="nofollow">CVX</a>) led the Dow Jones Industrials losers with a decline of over -2%. Other notable declines included ConocoPhillips (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/cop" rel="nofollow">COP</a>) and Exxon Mobil (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/xom" rel="nofollow">XOM</a>), both down more than -2%.</p>

<p>Merus NV (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/mrus" rel="nofollow">MRUS</a>) surged over +35% after Genmab announced a deal to acquire the company for $8 billion, or $97 per share.</p>

<p>Robinhood Markets (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/hood" rel="nofollow">HOOD</a>) led S&amp;P 500 gainers with a rise of more than +12% after CEO Tenev reported that customers have transacted over 4 billion contracts on prediction markets, with 2 billion occurring in Q3 alone. Western Digital (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/wdc" rel="nofollow">WDC</a>) also saw a significant increase, closing up more than +9% after Rosenblatt Securities raised its target on the stock to $125 from $90.</p>

<p>AppLovin (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/app" rel="nofollow">APP</a>) closed up more than +6% after Phillip Securities initiated coverage with an accumulate recommendation and a price target of $725. Kellanova (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/k" rel="nofollow">K</a>) rose over +5% following news that the European Union is “leading towards clearing” Mars Inc.’s acquisition of the company. Oklo (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/oklo" rel="nofollow">OKLO</a>) also increased by more than +5% after Barclays initiated coverage with an overweight recommendation and a price target of $146.</p>

<p>Electronic Arts (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/ea" rel="nofollow">EA</a>) closed up more than +4% after a consortium including PIF, Silver Lake, and Affinity partners acquired the company for $55 billion, or $210 per share. In contrast, MoonLake Immunotherapeutics (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/mltx" rel="nofollow">MLTX</a>) plummeted over -89% due to disappointing late-stage clinical trial results for its experimental drug targeting hidradenitis suppurativa.</p>

<p>Williams-Sonoma (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/wsm" rel="nofollow">WSM</a>) led S&amp;P 500 losers, closing down more than -4% after President Trump threatened additional tariffs on furniture imports. RH (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/rh" rel="nofollow">RH</a>) also fell over -2% in response. Warner Bros Discovery (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/wbd" rel="nofollow">WBD</a>) closed down more than -3% amid concerns that Trump’s proposed 100% tariff on overseas films could inflate programming budgets for studios.</p>

<p>Western Alliance Bancorp (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/wal" rel="nofollow">WAL</a>) fell more than -1% after Wells Fargo Securities downgraded the stock to underweight from equal weight. Choice Hotels (<a target="_blank" href="https://www.nasdaq.com/market-activity/stocks/chh" rel="nofollow">CHH</a>) also declined over -1% following a downgrade from Bank of America Global Research to underperform from buy, with a price target of $110.</p>

<p><strong>Earnings Reports (9/30/2025)</strong></p>
<p>Lamb Weston Holdings Inc (LW), NIKE Inc (NKE), Paychex Inc (PAYX), United Natural Foods Inc (UNFI).</p>
<i>
    On the date of publication,
    <a target="_self" href="https://www.barchart.com/news/authors/5/rich-asplund" rel="nofollow">Rich Asplund</a>
    did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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