MARKET WRAP

We’ll all remember where we were for yesterday’s down day. Stocks bounced back from yesterday’s brief weakness to close at new all-time highs in both SPX and QQQ. On the day: SPX +0.6%, QQQ +1.2%, and IWM +1%

Elsewhere, early equity strength was aided by lower Treasury yields, though they reversed slightly higher after the FOMC minutes. The US10YY stayed around 4.13%. Gold didn’t hesitate at all at 4k, with another +1.5% move higher. DXY is at its highest level since August, with a not so stealthy (anymore) rally back to $98.86. The VIX got hit today, back to 16.30.

Notable Gainers: AMD +10.7%, DELL +9%, ANET +8.3%, SMCI +6%, FCX +5.4%, CAT +3.2%, CSCO +2%, NVDA +2%

Notable Losers: IBM -1.7%, GS -1.3%, PG -1.2%, AXP -1%, SBUX -1.4%, FICO -9.5%, LYV -3.3%

After hours: SPY and QQQ closed well and are both up a tick afterhours.

• MRKT Call: Liz and Guy discuss the “bubble in bubble talk,” gold’s breakout above 4k and its drivers, valuations heading into earnings season, and the circular funding dynamics shaping the AI trade.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500, Nasdaq rise to fresh records as Wall Street looks past U.S. government shutdown (CNBC)

• Divided Fed officials saw another two interest rate cuts by the end of 2025, minutes show (CNBC)

• Bond Traders See Data Whirlwind Shattering Shutdown-Induced Calm (Bloomberg)

• IRS Furloughs Nearly Half Its Workforce as US Shutdown Drags On (Bloomberg)

• A New Wall Street Trade Is Powering Gold and Hitting Currencies (WSJ)

• CoreWeave stock rallies as company introduces new AI tools for developers (CNBC) 

• Nvidia shares rise after CEO Huang says AI computing demand is up ‘substantially’ (CNBC)

• OpenAI, Nvidia Fuel $1 Trillion AI Market With Web of Circular Deals (Bloomberg)

WHAT’S NEXT?

SPX was once again challenging the 6750 level most of the day — its third attempt to break above that mark since first touching it last Friday. Today’s finish above that level keeps a run toward 6800 by week’s end very much on the table. Early gains were helped by a dip in Treasury yields, with the 10-year briefly falling back below 4.10% this morning, though yields turned higher following the release of the FOMC minutes. The minutes revealed some hesitation among committee members about moving too aggressively on rate cuts while inflation remains sticky — a modest shift that nudged yields up but wasn’t enough to derail the rally. From Peter Boockvar:

Bottom line, the fed funds futures are pricing in over the next two meetings this year a 100% chance of one more cut and 60% chance of two. That the next one will happen at the end of October is currently priced at 88%. I still think as long as Jay Powell is in the Chair seat (has 5 meetings left), we’re only going to see rate tweaks from here as long as inflation remains around 3%. If inflation decelerates from here towards 2% and/or the unemployment rate heads towards 5%, they will of course be cutting more.

The most rate-sensitive index, the RUT/IWM, is also knocking on the door of a breakout, closing right at its recent all-time closing high. A move above 250 could inject fresh momentum into the broader market and likely coincide with a continued expansion in implied volatility — a trend already underway as upside call skews widen. Retail traders appear to be leaning into that momentum, working further down the cap spectrum in search of homeruns. That growing demand for upside calls can often become self-fulfilling, as market makers buy stock to hedge short call positions, fueling additional strength. Whether that dynamic carries the market through the next leg higher or gives way to exhaustion remains the key question heading into the end of the week. If you’re looking for any contrarian signals of the rally getting near a top, a new meme stock ETF launched today.

For tomorrow, no initial jobless claims etc, but some Fed speak and a couple of earnings beginning to roll in, taking us into the real kickoff next week:

• Thursday, October 9th

  • Fed Speak: Powell (pre-recorded), Barr, Kashkari, Bowman

  • Pre-market: DAL 6.5% , PEP 4%

TODAY’S EPISODE

Watch MRKT Call’s newest episode: Early Earnings Season Preview: Mind Your Margins!

Liz joins Guy to discuss the bubble in bubble talk, and how stretched the market would need to get from here before it bursts. A look at gold’s breakout above 4k, the factors at play including the dollar, yen, institutional vs etf behavior and more. Valuations into earnings season. And, finally a look at the circular funding in the AI space via a flow chart.

• Analysis - SPX, QQQ, Gold, GLD, USDJPY, IWM

• SoFi Weekly - Hyperscaler CapEx still increasing, what happens in ‘26 when the spending growth rate slows? A look at current S&P profit margin vs historical. And high quality vs low quality earnings names.

• FactSet / Butters Earnings Analysis - Current S&P earnings estimate 8.1%. With positive surprises likely putting us at 13% for Q3. 

• Your Questions

  • Keith Polnik - What is Elizabeth’s take on small caps, will they ever outperform large caps?

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