Sox and SOXX Rally, Cubs and Bonds Tumble

Last Week

SOXX and White Sox fans celebrated, while the broader market struggled and the Cubs stumbled.  Despite cooler-than-expected September jobs data, bond yields continued to climb to multi-decade highs, with the 10-year Treasury yield jumping another 10 basis points to 5.28%. It was the worst quarter since 1994 for the bond market; nevertheless, the S&P has stayed steady near record highs, slipping just 0.27% for the week, while strength in semiconductor shares (SOXX +5%) boosted the Nasdaq Composite to a 0.4% gain. As in the past several weeks, the broader market was weak, with declining issues outnumbering advancing issues by a factor of 1.8-1. The Dollar moved to its highest level since the spring of 2025, while Gold sank over 3%.

The September nonfarm payrolls report showed employers added just 29K jobs, well short of the 85K consensus and a sharp slowdown from August’s downwardly revised gain of 133K. The softness in the labor market, combined with the previous week’s mild inflation reading, suggests the Fed will not raise rates again at its next meeting.

The love/hate relationship between tech stocks and investors took a positive turn, with strong earnings from Micron and NVIDIA and a $150 billion boost to NVIDIA’s share buyback program. The “haters” make the case (in the words of Roger McNamee) that the current multi-trillion equity dollar valuations and proposed multi-trillion dollar capital spending have created a kind of delirium “balance on the head of a pin”: “The pin is this notion that people are going to deploy AI widely, they’re going to pay a ton of money for it, and that companies are going to get the cost structure down so it generates enough cash flow to service their debt”. Beyond questionable economics, many AI leaders also worry that this technology, left unchecked, could create uncontrollable negative consequences for humankind.

On the Chicago Sports Scene, the White Sox are red hot at the right time, dispensing of the Houston Astros and shutting out the Guardians in Game 1 of their playoff series. There were no “W” flags flying on the North Side as the Cubs season came to a swift end at the hands of the Padres. The Bears, meanwhile, dominated the Jets on both sides of the ball in a 23-12 victory that was far more lopsided than the final score suggested.

This Week

The economic calendar is quiet, with Friday’s release of the University of Michigan’s October Consumer Sentiment Index in focus. The mood in Ann Arbor will likely show another downbeat reading. Wolverine fans are feeling particularly somber given their football team’s most recent loss to the Golden Gophers from Minnesota.

Fed watchers will dissect the minutes from the September policy meeting when released on Wednesday afternoon.

Earnings season is on deck, with PepsiCo and Delta Air Lines headlining some early releases. S&P 500 composite third quarter earnings are expected to show another period of very strong growth.

The war enters its 7^th month, with no end in sight, and the resulting elevated energy and food prices provide a stiff headwind for the global economy, though they have not derailed equity markets so far.

The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.