Soft Labor Data Fuels Fed-Easing Bets, Chips and AI Lift the Nasdaq, Gold Hits a Record

Equities spent a pivotal stretch on the front foot. Softer signals from the labor market and cooler inflation expectations pressured yields lower, while risk appetite returned to technology—especially semis and AI infrastructure. Early in the week the S&P 500, Dow Jones, and Nasdaq 100 printed record levels, a pattern reaffirmed on Wednesday and Thursday. Even Friday’s tech fatigue on a yield uptick was selective: the S&P finished flat on the day, yet the week held firm thanks to rotation within tech and supportive macro narratives.

The 10-year Treasury yield oscillated around 4.08%–4.14%—first drifting down on hopes that a run of weak employment data gives the Fed room to ease, then snapping back on more hawkish tones from individual officials and a flicker of services-price pressure. Rate futures effectively locked in a 25 bp cut for the Oct 28–29 meeting, reaching 98%–100% midweek. For equities that translated into multiple support across long-duration segments—from mega-cap growth to the industrial plumbing around AI.

The labor picture leaned soft. JOLTS surprised with a small rise in openings, yet private ADP printed a second negative month—an uncommon signal of hiring fatigue. Manufacturing data was mixed: Chicago PMI slid to 40.6, while ISM Manufacturing improved to 49.1, a seven-month high that still sits just below expansion. Services told the opposite story as ISM Services slipped to 50.0, with the prices-paid component ticking up and keeping an eye trained on service-sector inflation.

Semiconductors were the locomotive of risk appetite all week. Gains stretched from equipment makers to compute leaders. Investors continue to reprice future cash flows across the AI stack; demand for compute, memory, networking, and power solutions supported not just “pure” chip names but also industrials levered to data-center power. Some of Friday’s gains evaporated as yields inched up and a few regulatory headlines hit, yet the broader setup remains constructive: capital keeps flowing into “AI hardware,” and dips are still being bought.

Drugmakers enjoyed a sugar-coated narrative. Agreements on pricing for select therapies and temporary tariff reprieves sketched a path toward broader access and a less onerous policy backdrop. Markets read this as a reduction of the sector’s policy discount and a better risk profile into coming quarters. The result was a rare blend of defensive and growth characteristics: lower beta than tech, but a stronger-than-usual news catalyst.

Energy sat on the other side of the ledger. WTI’s two-to-three percent downdrafts on key days pressured E&Ps and services. With inflation expectations easing and yields drifting, the commodity-sensitive complex lost initiative. Flows tilted toward areas where margins are less tethered to spot hydrocarbons and where multiples are underwritten by structural demand.

Gold rewrote its all-time high above $3,800/oz. The mix of expected Fed easing, tariff uncertainty, shutdown risk, and insurance against delayed government data releases stoked demand for havens. In portfolios, that acted as a counterweight to equity duration: some “insurance premium” migrated to precious metals, highlighting the dollar-liquidity sensitivity to political variables.

The shutdown risk materialized, automatically pushing back key releases and raising near-term uncertainty. At the same time, tariff headlines broadened to select consumer categories and materials, pressuring pockets of retail and home-related names via cost channels. Markets treated this largely as transitory noise against a stronger driver—financial conditions and the lagged impact of an easing cycle already underway.

European bourses moved in step with the U.S., flirting with historic or multi-year highs. Still, subdued bund yields and uneven macro capped exuberance. Asian trading was staggered by holidays in China and local dynamics in Japan. The global investor bet is unchanged: profit growth without recession and gentle rate normalization continue to buoy developed-market equity multiples.

The plot centers on two forces: a cooling labor market and still-sticky service prices. For now, the former outweighs the latter, dovetailing with near-certain odds of an October cut. Practically, that preserves demand for long-cash-flow stories—especially across the AI stack and data-center enablers—punctuated by occasional profit-taking when yields pop. Pharma remains a lower-beta anchor with its own catalysts. Energy needs confirmation from crude to reclaim leadership. The same-nature risks—shutdown and tariffs—add volatility and intra-sector reshuffling but don’t yet break the core “easing without recession” thesis.

The week left a clear message: markets are still willing to pay for structural growth and are trimming discounts where policy optics have improved. Yields remain the day-to-day barometer, but every fresh sign of labor softness nudges the Fed toward a gentler path and keeps indexes probing new highs. In this environment, duration discipline and vigilance for policy surprises are the best insurance against sentiment that still favors the bulls.