Market Setup
Futures gained ground to close a volatile week for equities. The main pattern at work: once crude oil breaks lower, money pushes into risk-on assets, which means stocks. That happened today. Yields pulled back after spiking to 24-year highs the prior day on the 10-year and 30-year. The pullback started midday the day before, driven by the view that the Federal Reserve may not hike rates at the October meeting, about three weeks out. Falling oil supports equities; consolidation or a further pullback in equities would also push money into risk-on assets.
Risks remain. The US might send a third aircraft carrier to the Middle East and deploy more troops. President Trump said the US may strike Iran after the midterm elections in early November.
Tech has led the market. The NASDAQ 100 sits less than 1% below its all-time high and could hit it today on a good jobs report. The other roughly 490 stocks in the S&P 500 lag. The S&P 500 equal-weight index fell 5% in September and is near its 200-day simple moving average. Information technology and communication services, the biggest components of both the S&P 500 and NASDAQ 100, still lead higher. The open question is whether they can keep rising and pull up the rest of the market. Underlying market tone is still not bullish.
Jobs Report
The report comes out in about 25 minutes. Expectations: 85,000 to 90,000 jobs added, below the 162,000 added previously. Watch for revisions to the August number, possibly lower. The unemployment rate is expected to hold at about 4.1%. The economy is at full employment, so the Fed does not have to worry about that side of its dual mandate.
A hot print over 100,000 could firm interest rates back up on fears the economy is running too hot and that working people keep spending. Retail sales showed resilience. The final read on Q2 GDP came in at 2.2% versus 1.5% expected. A hotter-than-expected number could be a negative for equities.
A print near 90,000, 80,000, or even 50,000 would be the Goldilocks outcome, showing a pause in a hot jobs market and supporting no cut in October. On the CME FedWatch tool, the probability of an October rate hike was over 70% at the start of the week; it dropped to about 24% ahead of the bond market open today. Odds fell further after Fed Vice Chair Philip Jefferson spoke the prior day, echoing language that the Fed needs more time to assess conditions. The question: will the jobs report keep the Fed on its "need more time" track?
Nvidia (NVDA)
Morgan Stanley (MS) reinstated NVDA as its top pick with a $300 price target. Key points from the note: broad-based supply chains and a global customer base. Competition comes from AMD (AMD) and, for specialized chips, Marvell (MRVL) and Broadcom (AVGO), but NVDA's customer base is wide. The biggest takeaways: diversity of the customer base, growth within traditional hyperscalers and frontier AI labs, and a strategy to raise revenue per gigawatt substantially.
NVDA stock stalled and consolidated through most of 2026, then rebounded as expectations rose that its growth rate will continue. The keys going forward: whether growth rates keep accelerating and whether margins stay strong. Margins came in at 75%, very good for the space; the company projected margins shrinking to 72% to 71% and bottoming there. Watch capital spending this earnings season. Everyone asks what "inning" the AI infrastructure buildout is in - second, fourth, or seventh. The hyperscalers are the deciding factor. If they cut capex or lower projections heading into 2027 after raising them into late 2026, that is the key risk for NVDA and most chipmakers.
onsemi (ON) and Synaptics (SYNA)
Both the buyer and the target rose. ON traded higher and SYNA jumped double digits. The original all-stock deal was announced in June, swapping 1.35 ON shares for each SYNA share, valuing the deal at $7 billion; both stocks popped then. The deal has been redone: ON will pay about $123 per share for SYNA, giving a deal value of about $5.7 billion, down from $7 billion. It is now an all-cash transaction rather than all-stock. Speculation says another bidder came in for SYNA.
SYNA's chief executive said that, as when first announced, the acquisition addresses an important part of the company's strategic direction, and the revised agreement is more financially attractive for shareholders. When the deal stood at $7 billion, SYNA first popped then fell sharply below Street expectations; shares are now popping back. ON shares fell significantly on the first deal, so shareholders like the cash structure better even though the total deal size is smaller.
Nike (NKE)
NKE's turnaround "win now" strategy is not taking hold. CEO Elliot Hill, a lifetime NKE person who was there during the 1980s and early 1990s heyday, was brought back, but this may be misexecution. The company moved away from retail toward Nike Direct, which is not working, and is now pulling back there.
Fiscal first-quarter revenue came in at $11.2 billion versus estimates of just over $11.3 billion. A decline of about 2.5% to 2.7% was expected; actual revenue fell 4%, a miss on sales. After two straight quarters of falling revenue, NKE said it expects sales to keep declining. Current-quarter guidance fell far below the Street's $1.67 figure, now expected at $1.15 to $1.35. Full-year revenue is seen declining in the high single digits. The turnaround will take even longer than the Street expected. Many price-target cuts followed today. NKE has to execute far better. For shareholders who bought the dip, the dip keeps dipping.
