Nasdaq Index: PCE Rally Meets Yield Wall as Micron Earnings Loom

• Core PCE at 3.0% year-over-year undershot the 3.3% forecast, causing markets to slash October rate hike probability from 70% earlier in the week to 35%, though December hikes remain priced in
• The 10-year Treasury yield remained elevated near 5.27% (approaching 2007 peaks) and the 30-year at 5.62% (2002 levels), limiting stock rally momentum despite softer inflation data
• Nasdaq gains were driven narrowly by software and megacap names (Alphabet, Amazon, Apple, Microsoft) while chip stocks lagged, with Micron's after-hours earnings report seen as a critical test for semiconductor sector participation

Market Summary: Nasdaq Rallies on Softer PCE Data as Bond Yields Remain Elevated

Key Market Movements

The Nasdaq Composite Index rose 228.06 points (+0.85%) to 27,025.60, while the S&P 500 gained 37.32 points (+0.49%) to 7,708.16 as of September 30, 2026. The rally was driven by softer-than-expected inflation data, though elevated bond yields limited gains.

Inflation and Fed Rate Outlook

Core PCE for August rose 3.0% year-over-year, below the 3.3% forecast and July's pace. Headline PCE slowed to 3.4% from 3.7%. This data caused October rate hike odds to plunge from 70% earlier in the week to near 35%, down from 50% Tuesday. However, December rate hike expectations remain intact.

The 10-Year Treasury yield held near 5.27%, approaching 2007 peaks, while the 30-Year yield remained around 5.62%, levels last seen in 2002. The elevated long-end yields are constraining the equity rally despite softer inflation.

Sector Performance

Software and megacap growth stocks led gains, with Alphabet, Amazon, Apple, Palo Alto Networks, Microsoft, and Intuit advancing. However, semiconductor stocks lagged, with AMD and Broadcom declining. Micron's after-hours earnings report is viewed as a critical test for the chip sector.

Other Market Factors

Crude oil prices remain elevated with Brent near $104/barrel and U.S. crude above $91, reflecting persistent Middle East supply premiums. ADP reported 90,000 private jobs added in September, beating the 68,000 estimate. Friday's Non-Farm Payrolls report (forecast: 84,000 jobs) represents the next major catalyst for markets.

The narrow rally composition and elevated yields suggest caution despite positive momentum.