Weekly Trader's Outlook

If you read last week's blog, you might recall that I had a "moderately bearish" outlook for stocks this week, citing encouraging technicals in the (market-cap weighted) S&P 500, Philadelphia Semiconductor Index (SOX), and Nasdaq Composite, a bearish-to-bullish seasonal shift as we move into October and the potential for U.S. Treasuries to find some bid support (i.e. yields stop making fresh cycle highs). At the time of this writing, the S&P 500 and the Dow Jones Industrial Average are on track to be down slightly on the week, but the Nasdaq Composite and SOX are on track to be up slightly, and the Nasdaq 100 hit a fresh all-time high today. The continued divergence in performance among the majors conveys the impact rising bond yields are having on stocks. The money flow continues to shift towards the tech/artificial intelligence (AI) infrastructure complex, at the expense of the "non-AI" areas of the market, which could be impacted be higher interest rates. U.S. Treasury yields, along with global bond yields, hit fresh cycle highs this week, and this occurred despite a relatively benign inflation report and soft monthly jobs report (more on this in the "Economic Data, Rates & the Fed" section below).

Oil prices are on track to be down slightly on the week, though the Iran conflict persists (U.S. President Trump rejected an Iranian proposal to reopen the Strait of Hormuz last weekend). On a positive note, leaders of the G7 nations agreed to release some diesel stockpiles earlier today. The countries said they will release 100M barrels immediately and convene in the coming days to discuss the possibility of additional releases.

In earnings news, memory supplier Micron Technology delivered a solid "beat and raise" quarter on Wednesday, signaling still excess demand for compute, but the stock failed to see a post-results rally. Regardless, Q3 earnings estimates continue to trend higher (the FactSet Q3 year-over-year earnings growth rate for the S&P 500 is currently 29.1%), with earnings season unofficially slated to kick-off on Tuesday, October 13th with several of the big banks.

At the time of this writing (2:00 p.m. ET) stocks are higher across the board, though off the highs of the session due to the bounce back in Treasury yields (DJI + 248, SPX + 54, $COMP + 305, RUT + 28). I'm not a bond expert, but admittedly I am a little surprised to see how resilient U.S. Treasury yields have been this week, despite a benign Personal Consumption Expenditures (PCE) report, soft jobs report, and a modest pullback in Federal Reserve rate hike expectations. I understand there are several factors pushing yields higher, including longer-term economic growth and inflation expectations, AI debt issuance and rising yields on global sovereign debt, but the velocity of the move has been surprising (10-year yields are up 50 basis points in a month). I don't know whether Treasury yields will continue to push higher next week, but I suspect that if they can cool off, this would likely give sideline equity investors enough of an excuse to put some capital back to work, especially in those areas of the market that have been sold off due to higher yields (small-caps, utilities, real estate, financials etc.). The technicals are split, meaning the (market-cap weighted) S&P 500 looks firm, the SOX and NDX look bullish, while the SPXEW, DJI and RUT still appear to be held within bearish intermediate-term downtrends. Next week the economic calendar is light, and Q3 earnings season doesn't really start until October 13th, so oil prices and (more importantly) the trajectory of Treasury yields will likely be the primary driver of price action. The potential for some "mean reversion" in Treasury yields (meaning a modest pullback) and the beaten-down areas of the market, along with the potential for some pre-earnings season buying in anticipation of what appears to be another strong quarter, is a consideration in my view. And as we move through October seasonality incrementally improves. Therefore, I am going to once again provide a "moderately bullish" outlook for stocks next week. What could challenge my forecast? If Treasury yields, or global bond yields for that matter, continue to hit fresh cycle highs, this will likely put pressure on stocks.

• Monday (Oct. 5): ISM Non-Manufacturing Index, S&P Global U.S. Services PMI - Final
• Tuesday (Oct. 6): Trade Balance
• Wednesday (Oct. 7): Consumer Credit, EIA Crude Oil Inventories, MBA Mortgage Applications Index
• Thursday (Oct. 8): Continuing Claims, EIA Natural Gas Inventories, Initial Claims, Wholesale Inventories
• Friday (Oct. 9): University of Michigan Consumer Sentiment - Preliminary

• Monday (Oct. 5): no reports
• Tuesday (Oct. 6): Apogee Enterprises Inc. (APOG), Constellation Brands Inc. (STZ), Lamb Weston Holdings Inc. (LW), Neogen Corporation (NEOG), Penguin Solutions Inc. (PENG), RPM International Inc. (RPM)
• Wednesday (Oct. 7): Applied Digital Corporation (APLD), Levi Strauss & co. (LEVI), Resources Connection Inc. (RGP), Richardson Electronics Ltd. (RELL)
• Thursday (Oct. 8): AngioDynamics Inc. (ANGO), Helen of Troy Ltd. (HELE), NovaGold Resources Inc. (NG), Nurix Therapeutics Inc. (NRIX), PepsiCo Inc. (PEP), Tilray Brands Inc. (TLRY)
• Friday (Oct. 9): Delta Air Lines Inc. (DAL), GoldMining Inc. (GLDG), New Horizon Aircraft Ltd. (HOVR)

There was a healthy dose of economic data this week, which was highlighted by the monthly PCE Prices report and monthly job report. The PCE report came in cooler than expected, but there were revisions to the PCE calculations that were made by the U.S. Bureau of Economic Analysis. This morning's monthly Nonfarm Payrolls report came in weaker than expected, and wage growth was muted, both of which initially helped Treasury yields and Fed rate hike probabilities move lower. However, Treasury yields have moved back higher at the time of this writing, so there is some resiliency to the recent lift, not just in the U.S., but globally. Here's a breakdown of the reports:

• Nonfarm Payrolls: Headline payrolls increased by 29,000 in September, which was below the +90,000 economists were expecting. Additionally, August payrolls were revised down to +133,000 from the initial report of +162,000. Private payroll growth was resilient at +46K.
• Unemployment Rate: Ticked up to 4.2% in September from 4.1% in the prior month, which was above the 4.1% expected.
• Average Hourly Earnings: Average hourly earnings increased 0.1% month-over-month, which was below the +0.3% economists were expecting. On an annualized basis, average hourly earnings were down 0.1% from the prior month to 3.0%, which was 0.1% below the +3.1% economists were expecting. The three-month annualized pace is +2.36%, which represents the lowest level since March 2021.
• U.S. Labor Force Participation: Ticked up to 61.8% in September from 61.4% in the prior month.
• Average Workweek: 34.4 versus 34.3 expected.
• ADP Employment Change: U.S. private employers added 90K jobs in September, up from the (downwardly revised) 36,000 added in the prior month, and above the +68K economists were expecting. Payrolls in education and health care services increased 55K, goods producing jobs increased 31K and leisure and hospitality rose 22K, while financial activities declined by 16K and professional & business services lost 11K.
• JOLTs-Job Openings: Fell to 7,079,000 in August from 7,335,000 in the prior month, and well below the 7,225,000 economists were expecting. Openings dropped by 256,000, which signals a slower hiring pace rather than aggressive layoffs.
• PCE Prices: The August headline Personal Consumption Expenditures Prices Index increased 0.31% from the prior month (below the 0.4% expected), which puts the annual headline increase at 3.3% (below the +3.7% expected). On a core basis, August PCE Prices increased 0.247% (below the +0.3% expected), bringing the annual core increase to +3.0% (below the +3.3% expected). Core PCE in both June and July were revised lower, which put the three-month annualized change down to +2.05% when including August. Note: There were changes to the BEA's methodology in how it calculated spending on portfolio management, legal services and computer software.
• Q2 GDP – Third Estimate: Gross Domestic Product expanded at an annual rate of 2.2% in the second quarter, according to the third reading from the U.S. Bureau of Economic Analysis. This represents a significant upward revision from the previous estimate of +1.5%. The higher adjustment was driven by investment, consumer spending and government spending.
• S&P Global U.S. Manufacturing PMI: The seasonally adjusted manufacturing PMI jumped to 55.9 in September from 53.9 in August, but 0.1% below the 56.0 economists were expecting. This represents the highest level for this index since May 2022, and it has been in expansion territory (> 50.0) every month since August 2025.
• Consumer Confidence: Fell 6.7 points to 81.9 in September, which was below the 89.0 Dow Jones consensus forecast and is the lowest level since 2014.The conference's board Present Situation Index fell 7.9 points to 109.3, while the Expectations Index slipped 5.9 points to 63.6. Respondents on average expect an inflation rate of 6.1%, which is up 0.3% from the prior month.
• Personal Income: 0.2% vs. 0.3% est.
• Personal Spending: 0.9% vs. 0.6% est.
• Construction Spending: +0.9% vs. 0.2% est.
• Factory Orders: +0.1% vs. +0.1% est.
• EIA Crude Oil Inventories: +0.922M barrels.
• EIA Natural Gas Inventories: +64 bcf.
• Initial Jobless Claims: Initial applications for U.S. jobless benefits edged down 1K from last week to 197K, which was 3K below the 200K economists were expecting. Continuing Claims fell by 19K from the prior week to a seasonally adjusted 1.701M, which was below the 1.725M economists were expecting.
• The Atlanta Fed's GDPNow initial "nowcast" for Q3 GDP was revised down to 3.7% yesterday from 5.0% last week, primarily driven by downwardly revised estimates to consumer spending and net exports.

U.S. Treasury yields registered fresh cycle highs on the 10-year and 30-year this week which appeared to be driven by fresh cycle highs in several other countries such as France, Italy, Germany, Japan, and the UK. Compared to last Friday, two-year Treasury yields are down ~5 basis points (4.81% vs. 4.864%), 10-year yields increased ~7 basis points (5.254% vs. 5.184%) while 30-year yields rose ~11 basis points (5.614% vs. 5.502%).

Market expectations around potential rate hikes from the Federal Reserve eased some this week, which was driven by the cooler-than-expected PCE report on Wednesday plus this morning's soft Nonfarm Payrolls report. Per Bloomberg, market participants are putting a 47% probability of a Fed rate hike at the October Federal Open Market Committee meeting on Tuesday, which dropped to 37% on Wednesday, and is down to 20% today. Longer-term, the expectation is for 3.3 25-basis-point cuts between now and September 2027, down from 3.5 last Friday.

Last week I highlighted the technical improvement in the PHLX Semiconductor index (SOX), as the index pushed above its 50-day Simple Moving Average (SMA) the same day reports surfaced that AMD would be raising prices by 10% in Q4 (the green arrow in the chart). The SOX subsequently went through some sideways consolidation, but today it has gapped up to the highest levels since June, which is coinciding with Nvidia hitting a fresh all-time high ($237.88). Today's move higher is incrementally bullish, as the index is currently above the highs from mid-August. The next clear intermediate-term hurdle to clear on the upside appears to be the all-time high of 14,655 hit back on June 22nd.

Near-term technical translation: bullish

The Russell 2000 Index (RUT) is on track to be roughly unchanged on the week. This interest-rate-sensitive index has been an underperformer among the majors due to the push higher in bond yields over the past seven weeks. From a near-term technical perspective, the RUT found support at its 200-day SMA yesterday, which coincided with a pullback in 10-year Treasury yields (TNX). And although the RUT is up again today, Treasury yields have moved back into positive territory at the time of this writing (10-year yields are up ~4 basis points to 5.283%). On the one hand, it's encouraging to see support hold up at the 200-day SMA. On the other hand, today's "inverted hammer" daily candle is less convincing, and the RUT still remains confined within an intermediate-term downtrend. If the TNX can stop making fresh cycle highs (yesterday's high was 5.342%), perhaps the RUT can break out of this intermediate-term downtrend, but if yields continue to push higher in the coming days/weeks then this index could struggle.

Near-term technical translation: moderately bullish (since support held @ 200-day SMA)
Intermediate-term translation: moderately bearish (since downtrend is still intact)

The Bitwise 10 Large Crypto Index is up 3% since last Friday, with bitcoin up 3% and ether up 2% at the time of writing. With bitcoin trading above multiple estimates of investor cost basis, which currently range from approximately $76,000 to $83,000, according to data from Glassnode as of October 2, 2026, the average investor appears to be profitable. Leverage is beginning to rebuild across crypto markets, measured by rising futures open interest, though positioning remains below historical extremes according to Glassnode data as of October 2, 2026. Historically, improving investor profitability has coincided with stronger performance among more leveraged crypto exposures, including Digital Asset Treasury (DAT) equities.

The framework published in "Will the Bitcoin Halving Cycle Persist?" argued that market leadership often migrates from spot bitcoin toward increasingly leveraged proxies as a cycle matures. Today, a market-cap weighted index of the three largest DATs trades near the value of the underlying crypto holdings of its constituents, suggesting a limited valuation premium relative to history.

Bitcoin Mining Economics and the Pivot to AI argued that bitcoin's fair value may be a modest premium to the average miner's estimated cost of production. According to Glassnode data, bitcoin currently trades above the production cost of efficient miners but below that of inefficient miners, placing it between key production-cost thresholds rather than at historically stretched levels.

Historically, improving investor profitability has often coincided with higher valuation premiums for DATs. In these periods, DAT returns have been driven by appreciation in underlying crypto holdings and expansion in mNAV multiples. mNAV (multiple-to-net asset value) measures a DAT's enterprise value relative to the value of its cryptocurrency holdings. An mNAV above 1.0x indicates the company trades at a premium to the value of its underlying crypto assets, while an mNAV below 1.0x indicates it trades at a discount.

The sensitivity analysis below illustrates how DAT returns have historically responded to changes in both bitcoin prices and mNAV multiples. With bitcoin above the average investor cost basis, leverage rebuilding, and DATs trading near net asset value, the current environment shares characteristics with prior periods when DATs outperformed spot bitcoin.

The capital structure of the largest DAT has evolved significantly in recent years. Rather than relying primarily on common equity issuance, it now raises capital through preferred securities, convertibles, and other financing vehicles, broadening its investor base beyond traditional crypto-focused investors. As a result, investors may increasingly evaluate DATs based not only on the value of their underlying crypto holdings, but also on the perceived value of their crypto-focused capital markets platforms.

While competitive pressures may limit the magnitude of multiple expansion relative to prior cycles, periods of improving sentiment, rising investor profitability, and rebuilding leverage have historically been associated with higher mNAV valuations, although historical relationships may not persist. That said, DATs remain highly sensitive to cryptocurrency price volatility, capital markets conditions, financing costs, and company-specific execution risks, all of which could affect returns.

Jim Ferraioli, Director of Digital Currencies Research and Strategy, authored this report.

The Bloomberg chart below shows the current percentage of members within the S&P 500 (SPX), Nasdaq Composite (CCMP), and Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). In short, market breadth continued to deteriorate this week, which is generally not a healthy sign for the major indices. This suggests less participation among index members and relative outperformance by large and mega-cap stocks. Compared to last week, the SPX (white line) breadth is down to 44.11% from 47.80%, the CCMP (blue line) fell to 39.51% from 42.04%, and the RUT (red line) dropped to 48.80% from 51.61%.

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, percentage of stocks within an index that are above or below a longer-term moving average, or new highs vs. new lows.

This Week's Notable 52-week Highs (29 today): CrowdStrike Holdings Inc. (CRWD + $5.38 to $271.47), Hinge Health Inc. (HNGE - $0.14 to $97.81), Illumina Inc. (ILMN + $3.13 to $268.85), Natera Inc. (NTRA - $1.37 to $407.10), NetApp Inc. (NTAP + $8.07 to $223.12), Okta Inc. (OKTA + $2.58 to $215.21)

This Week's Notable 52-week Lows (69 today): AppLovin Corp. (APP - $4.78 to $276.53), AutoNation Inc. (AN + $1.50 to $166.49), BWX Technologies Inc. (BWXT - $1.26 to $135.54), Charter Communications Inc. (CHTR + $0.74 to $112.11), Fair Isaac & Company (FICO + $1.24 to $662.49), Nike Inc. (NKE - $2.11 to $33.05)