The S&P 500 Bearly Budges as Scariest Month of Year for Stocks Begins

The S&P 500 (Index: SPX) was nearly unchanged over the past week. The index dipped 0.28% from where it closed the preceding Friday, winding up the trading week ending on Friday, 2 October 2026 at 7,722.72.

While it might seem mostly balanced, that tiny, bearish change is masking some much bigger changes within the index over the past month.

That difference can be seen by comparing the trajectories of the regular market cap-weighted index and the equal-weighted version of the S&P 500, which we’ll represent with Invesco’s S&P 500 Equal Weight ETF (NYSE: RSP). The market cap-weighted S&P 500 declined 0.32% over the month from 3 September 2026 to 2 October 2026, while the equal-weighted version of the S&P 500 fell 4.69%.

The difference between the two versions of the S&P 500 index is being driven by the global bond rout that’s been taking place over this time, which has seen U.S. long-term bond yields rise as both Japan and France have seen their bond yields spike as both are experiencing debt crises.

In the U.S., the ongoing global bond rout has pushed up the yields of U.S. Treasuries to their highest levels in decades, also boosting U.S. interest rates. Consequently, interest rate sensitive stocks in the S&P 500 have been beaten down as bond yield have risen, subjecting the overall index to downward forces.

But the market cap-weighted S&P 500 has avoided plunging because it is being buoyed up by big tech stocks from the companies making big investments in Artificial Intelligence (AI) technologies, whose stock prices have increased in this period. The rise of big AI stocks is mostly offsetting the gravitational pull of the global bond rout. At least, so far.

The following chart shows the divergence between the market cap-weighted S&P 500 and the equal-weighted version of the index.

The latest update of the dividend futures-based model‘s alternative futures chart shows the battle between rising AI tech stocks and all other stocks is keeping the index right about where it would be expected to be provided investors are focusing on the now current quarter of 2026-Q4 in setting overall stock prices.

Here is our sampling of the random onset of new information that moved markets during the trading week ending on 2 October 2026 as the scariest month for stocks gets underway.

Monday, 28 September 2026

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

• China, US agree tariff cuts on $60 billion of goods including agriculture, household items

• China to cut tariffs on US farm goods, but list excludes soybeans

Oil prices jump over 4% as Trump rejects Iranian proposal to reopen Strait of Hormuz

• Mideast oil exports rebound in September as Saudi Arabia boosts shipments

Bigger trouble, stimulus developing in China:

• China’s industrial profit growth slows further as economic imbalances deepen

• China’s refined copper output on track for lowest growth in decades this year, analysts say

China’s cabinet pledges stronger policy support to meet growth target

• China Extends Mortgages To 40 Years, But Homebuyers Remain Reluctant To Borrow

BOJ minions thinking about hiking Japan’s interest rates more often because of inflation, JapanGov minion hints at more interventions to prop up currency:

• Bank of Japan debated need for faster rate hikes, July minutes show
• Japan’s corporate services inflation hits 2-year high
• Japan’s currency diplomat Mimura urges markets to heed ‘very clear’ warning on yen

ECB minions thinking about fighting Eurozone inflation, slowly:

• ECB’s Lagarde sticking to measured steps to quell inflation

Stocks fall as higher oil prices, Treasury yields weigh

• Markets ended lower as yields climbed and geopolitical tensions remained in focus

• U.S. 10 Year Treasury tops 5.25% as yields continue to climb

Gold and silver prices fall sharply as higher bond yields weigh on metals

Tuesday, 29 September 2026

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

• China, US pledge tariff cuts on $60 billion of goods including agriculture, toys, toasters
• Target lowers prices on nearly 2,000 items ahead of holiday season
• Oil falls as investors focus on Middle East supply
• Medicare Advantage premiums expected to drop more than 16% in 2027, CMS projects
• US single-family home prices rise in July, FHFA says
• Fed rate hike odds tumble to coin flip after Williams says no rush

Fed minions see more inflation ahead, not so sure about another rate hike, and worry about not saying enough:

• Fed’s Cook sees further inflationary pressures ahead
• Fed’s Barr says more rate hikes likely to be needed to curb inflation
• Fed’s Williams sees no urgency for next Fed rate hike
• Prospect of Fed pulling too far back on communications poses volatility risk, Musalem says

Bigger trouble, stimulus developing in China:

• China’s AI agents can lie and scheme – just like their US rivals
• China unveils rate cut, mortgage subsidies to spur growth
• China expects trade to grow despite external challenges
• China’s Golden Week travel surge masks cautious consumer spending
• China factories seen rebounding in September as Beijing signals more aid

ECB minions thinking about how to make Euro currency more popular:

• ECB eyes new currency safety nets to boost euro’s global role

U.S. equities closed in the red as oil prices slipped and yields remained in focus

• Equities end slightly lower as bond yields hold near multi-decade highs
• Nvidia sets biggest-ever buyback plan as AI chip competition weighs on stock performance

Wednesday, 30 September 2026

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

• US inflation rises below expectations in August, gives the Fed breathing space

• Core PCE Prints Cooler Than Expected Due To Change In Methodology, As Savings Rate Plunges To 3 Year Low

US second-quarter GDP revised higher amid robust consumer spending

US goods trade deficit widens sharply in August

Oil prices rise by about $1/bbl on stalled US-Iran talks and tight fuel markets

Fed now expected to sit on hands rather than hike U.S. interest rates quite so soon:

• Fed seen on pause in October after inflation data

Fed minion says inflation Fed minions have allowed on their watch for years is too damn high:

• Fed’s Cook: inflation has been too high for too long

Former chief minion’s overspending on headquarters remodel was bad management, not criminal

• Watchdog finds no Fed misconduct in renovation; Trump calls for Powell’s resignation

AI-related growth signs developing in China:

• Chinese factory activity expands in September amid AI boom
• China services growth hits three-month high, private PMI shows

BOJ minions thinking harder about hiking Japan’s interest rates more often:

• BOJ’s policy pivot opens scope for faster rate hikes

Bigger trouble developing in Eurozone:

• Inflation jumps across euro zone, raising pressure on ECB to hike

ECB minions standing by to leap into action, chief minion thinking hard about next career move:

• Price expectations and demand key in ECB’s next move, Schnabel says
• ECB’s Lagarde says it ‘would not be a good idea’ to run for French president

S&P 500 dips, Nasdaq higher on modest rise in inflation

• Wall Street ends mixed on last day of September
• U.S. 10-year Treasury yield crosses 5.30% to highest since 2002

Thursday, 1 October 2026

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

• US mortgage rates jump by most in 4 years in latest week
• US manufacturing steady in September, input prices increase
• Oil prices rise 2% as China suspends fuel exports

• Trump says he is still considering diesel export ban

US construction spending surges in August

Fed minions say they would like to see lower inflation. And maybe a half point rate hike, but not in October:

• Fed’s Kashkari says central bank must lower inflation pressures

• Fed’s Kashkari expects more rate hikes, unsure on need to act this month

Fed’s Cook sees AI inflationary push as a top 2027 risk

Fed’s Logan calls for ’50 bps or more’ in rate hikes

Bigger trouble developing out of China:

• Chinese refiners suspend October fuel exports to bolster stocks, sources say

• VIEW Chinese refiners suspend October fuel exports, sources say

Bigger trouble developing in Eurozone:

• Eurozone borrowing costs surge in global bond rout

• Debt Crisis Back? European Bond Markets Crash, CDS Explode Amid France Budget Panic Contagion

China driving worrying rise in EU imports, Commission official says

S&P 500 closes higher to start October as Treasury yields retreat from multiyear highs updates

• U.S. equities started Q4 in the green as markets closed slightly higher
• Yields fall after US 10-year hits highest since 2002; US stocks inch up

• Why are world bond markets selling off again?

Friday, 2 October 2026

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

• US job growth undershoots expectations in September, but labor market remains stable

• US job growth expected to slow in September; unemployment rate likely steady

Oil settles lower after Europe agrees to tap diesel reserves

• US tells France and Germany to release diesel stocks or face US export ban
• Trump: not going to be doing diesel export ban

US factory orders increase slightly in August

Fed minions expected to take October 2026 rate hike off the table, Fed minions seem confused about next actions:

• Fed policymakers lean against October rate hike

• Fed may skip October but pull rate hike trigger in December

Fed’s Goolsbee says rate hike and pause both ‘on the table’

Bigger trouble developing out of China:

• China fuel export suspension to choke supplies in Asia

Bigger trouble developing in Japan, BOJ minions get data supporting their plans to hike Japan’s interest rates more:

• Japan’s unemployment rate rises to 2.5% in August, above expectations
• Tokyo core inflation rate jumps in September, bolsters case for more BOJ hikes

Bigger trouble developing in Eurozone, ECB minions counting on Eurozone debt crisis to counter inflation:

• Euro zone inflation surges more than expected
• ECB’s Rehn says soaring yields may curb inflation impact of expensive energy

S&P 500 ends week lower despite Friday rally

• Stocks climb after weak US jobs data, but bonds resume selling
• Global bond rout deepens, pushes US Treasury yields to 24-year peak

The CME Group’s FedWatch Tool no longer anticipates a quarter point rate hike when the Fed meets to consider how to set the Federal Funds Rate on 28 October (2026-Q4). Instead, it now anticipates the Fed’s next adjustment to interest rates will still be a quarter point increase, coming when the Fed meets on 9 December (2026-Q4).

Looking beyond that date, the FedWatch Tool projects the Fed will keep hiking rates a quarter point at a time at twelve-week intervals, with at least three rate hikes predicted in 2027. Those forecast hikes would be announced on 17 March (2027-Q1), 9 June (2027-Q2) and 15 September (2027-Q3).

The Atlanta Fed’s GDPNow tool‘s projection of real GDP growth for the U.S. economy in 2026-Q3 declined to 3.7%, falling from the +5.0% annualized growth it forecast a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull and bear examining a perfectly balanced scale labeled ‘AI STOCKS’ (green pan) and ‘ALL OTHER STOCKS’ (red pan), set against a Wall Street background.”