S&P 500 Rises as Bulls Load Up on Big Cap AI Stocks

The S&P 500 (Index: SPX) hit a new record high of 7,818.54 on Tuesday, 6 October 2026. The index then proceeded to bounce around a little below that level before wrapping up the trading week at 7,811.54, less than 0.1% below its new record high close.

Overall, it was a good week for the handful of big cap AI tech stocks that account for a disproportionately large portion of the total value of the S&P 500 index. It was a particularly good week for Nvidia (NASDAQ: NVDA), the single stock whose shares account for eight percent of the entire market capitalization of the S&P 500 index, which not uncoincidentally, also hit its own all time record high on Tuesday, 6 October 2026 as spending on Artificial Intelligence (AI)-related infrastructure and development continues to power the earnings of these megacap stocks.

How long that state of affairs might continue is perhaps the biggest question investors face as the fourth quarter’s earnings season gets underway, which is dueling with the other big question of how much more might the Federal Reserve hike short-term interest rates in the U.S.?

On that count, the CME Group’s FedWatch Tool outlook was effectively unchanged from the previous week. It continues to project the Fed will act to hike the Federal Funds Rate by a quarter point on 9 December (2026-Q4), followed by more quarter point rate hikes that will be announced when the Fed’s rate-setting Open Market Committee meets on 17 March (2027-Q1) and 9 June (2027-Q2). What did change is that the FedWatch tool now sees the June 2027 hike as the last in 2027.

The latest update of the dividend futures-based model‘s alternative futures chart indicates investors shifted their forward-looking attention from the current quarter of 2026-Q4 to the slightly more distant future quarter of 2027-Q1 on Friday, 9 October 2026. With the Fed expected to leave interest rates alone until December, the shift in focus signals investors will be paying close attention to how the outlooks of publicly-traded businesses going into 2027 might change as they report their earnings.

Here are the market moving headlines of the trading week ending on Friday, 9 October 2026:

Monday, 5 October 2026

• Signs and portents for the U.S. economy:

• US services sector cools in September, price pressures building
• Oil slips on rising Mideast crude exports, G7 stocks release

• OPEC+ agrees to keep November oil output targets steady
• Trump to issue order expanding access to tax-exempt diesel fuel, sources say

Fed minions say they won’t hike rates in October, but might in December 2026:

• Fed may skip October but pull rate hike trigger in December
• Fed’s Hammack tells PBS there’s still time to weigh next monetary policy move

Bigger trouble developing in China:

• China shuts hundreds of banks as Beijing moves to shore up its financial system

Former BOJ minion says it’s time BOJ and JapanGov minions changed their gamebook:

• Reflationist ex-BOJ policymaker calls end to low rates, big spending

Bigger trouble developing in the Eurozone:

• French bond contagion fears are rattling the euro

• Euro drops to 17-month low on France debt concerns

France, Germany push for EU rapid-response trade tool with likely focus on China

Wall Street finished on top as the Nasdaq tagged a record high

• Nasdaq notches record high close as investors focus on earnings
• S&P 500 nears record high despite the struggling underlining breadth

Tuesday, 6 October 2026

• Signs and portents for the U.S. economy:

• US trade deficit widens in August amid strong imports
• Oil rises as concerns over Houthi attacks on Saudi Arabia eclipse supply recovery

• Trump expands access to tax-exempt diesel fuel
• US EIA hikes oil price forecasts again as Iran war drains global stockpile

Fed minions say they’re waiting to see what happens with oil and global bond crisis shocks before changing U.S. short term interest rates, want to change how they “supervise” U.S. banks:

• Fed’s Daly: need for more hikes hinges on what happens with shocks
• Fed plans to overhaul bank supervision responsibilities, Bowman says

Lesser stimulus for exports developing in China:

• China polishes a potent weapon for EU car wars

BOJ minions thinking about changing up their monetary policy strategies as they realize they’re getting the inflation they wanted:

• BOJ chief calls for more focus on anchoring inflation around target
• BOJ may signal underlying inflation has hit 2% goal, sources say
• BOJ says AI boom may have eased financial conditions, warns of market risks
• BOJ’s dovish dissenter signals support for future rate hikes

Lesser trouble developing in Eurozone:

• Le Pen vows drastic budget cuts to prevent French ‘default’ on debt

• French Bonds Rally As Le Pen Unveils Shadow Budget To Pull France Back From Fiscal Brink
• Sayonara, OATs: After Treasuries, Japan Now Looms Over France’s Bond Rout

ECB minions see higher rates crushing Eurozone economy enough to lower energy prices, warned that chief minions plans to leave early for next job not a good idea:

• ECB’s Rehn: High yields to dampen energy price pass-through
• Early ECB leadership change could worsen Paris bond jolt

Wall Street ended higher as S&P 500 and Nasdaq tag new highs

• S&P 500, Nasdaq reach record closing highs as focus pivots to earnings
• Wall Street profits soar to $45.9 billion in first half of 2026, report shows

Wednesday, 7 October 2026

• Signs and portents for the U.S. economy:

• US 30-year mortgage rate hits highest in nearly three years

• Mortgage rates sit at nearly 3-year high, and demand continues to shrink

Oil prices settle down as IEA agrees to accelerate oil stock release

US bonds selloff eases, yields off highs, after strong 10-year note auction

Fed minions thinking hard about hiking U.S. interest rates again:

• Hawkish FOMC Minutes Show All 19 Fed Officials Supported Rate Hike, “Most” Assess Another Hike “By Year End Is Appropriate”

• Fed policymakers divided over rate-hike logic in September, minutes show
• Fed minutes show some officials want to prepare for market stress

Bigger trouble developing in Eurozone:

• Europe stocks retreat after three-day rise as rising yields, oil dent sentiment

• European bank shares fall as bond yields surge, spreads widen
• France does not need ECB’s help at present, says Bank of France head

EU seeks to cut trade deficit with China in talks with Beijing

Wall Street closed in the red as investors focused on yields and the Fed minutes

• Wall Street ends lower, off record highs, as Treasury yields climb
• S&P 500 stocks with negative beta hit record 130

Thursday, 8 October 2026

• Signs and portents for the U.S. economy:

• US 30-year fixed-rate mortgage rate hits 7.40%, likely to further erode housing demand
• Oil jumps as Middle East supply concerns persist amid shipping attacks

• Crude oil turns lower as IEA agrees to accelerate oil stock release, prioritize diesel

US weekly jobless claims fall as layoffs remain low

Fed minions say they want to hike U.S. interest rates more, but willing to spread the hikes out:

• Fed’s Waller: More hikes needed, but there is ‘flexibility’ about the pace
• Fed’s Musalem says tighter monetary policy needed to lower inflation

BOJ minions worry about inflation getting bigger than they wanted:

• Bank of Japan sees broadening inflationary pressure

ECB minions put up ‘Help Wanted’ sign in window:

• Euro zone finance ministers start steps to replace ECB’s Schnabel

S&P 500, Nasdaq end lower as crude prices jump, chip stocks weigh

• Wall Street ends mostly lower on oil pop, AI stock retreat

Friday, 9 October 2026

• Signs and portents for the U.S. economy:

• US freezes green cards for Microsoft and other IT firms
• Oil falls as Trump comments on Iran talks ease supply fears

• Trump says Russia to immediately supply 300,000 tons of diesel fuel
• US diesel prices remain high despite Trump’s moves to boost supplies

Port of Los Angeles sets September volume record, executive director says

Fed minion still not cleared in ethics probe:

• Trump renews bid to fire Fed’s Cook with fresh White House inquiry
• Fed’s Cook lawyers say hearing will show no mortgage fraud case

Bigger stimulus, more control over regional economies and AI developing in China:

• China ramps up fiscal push to meet growth target
• China’s tax crackdown piles pressure on luxury brands as US spending falters
• China to resume October fuel exports after holiday pause, sources say
• China vows to curb tech bubbles, keep AI risks in check

ECB minions learn German politicians want more control over what they do, Eurozone minions tell French politicians to get their act together:

• Germany wants seat on ECB’s executive board, finance minister says
• Euro zone ministers tell France to pass 2027 budget to calm markets

Eurozone minions looking to cut China’s exports of hybrid autos after blocking EVs:

• EU says it agrees with China to halve hybrid vehicle exports to EU
• Alarm bells sound in Brussels as EU sales of Chinese hybrid cars rocket

S&P 500 advances for week amid AI jitters and sector rotation

• Wall Street posts weekly gains with earnings, inflation data on tap

• Dow rises 400 points on Friday as Wall Street scores winning week

S&P 500’s top five stocks match market cap of bottom 434, Batnick says

• From railroads to AI, the new Gilded Age of concentration
• AI-centered US stock bull market nears four-year anniversary

The Atlanta Fed’s GDPNow tool‘s projection of real GDP growth for the U.S. economy in 2026-Q3 dipped to 3.6% from the +3.7% annualized growth it projected a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a young bull and bear who are out trick-or-treating on Wall Street with the bull filling their bag with candy labeled ‘AI’ while the bear says ‘YOU ARE GOING TO GET SICK EATING ALL THAT!’”.