Key Highlights

  • Alphabet finished Friday's session higher with no company-specific news found, outpacing fellow mega-caps Apple and Microsoft as communication services finished modestly higher.
  • Nvidia hit a record high the same session after Morgan Stanley named it its top semiconductor pick, while Amazon climbed on reports it is exploring a leaseback structure for some of its Nvidia chips.
  • The Nasdaq-100 closed at 30,807.93, up 306.37 points, a record, while the S&P 500 added 56.27 points to 7,722.72 and the Dow climbed 250.40 points to 51,176.96.
  • Only a small minority of S&P 500 stocks traded above their 50-day moving averages, and both the Dow and S&P 500 finished the week lower even as Nasdaq indexes ended the week ahead.

Alphabet (NASDAQ:GOOGL) finished Friday's session higher, adding to a broad rally in mega-cap technology stocks that carried the Nasdaq-100 to a fresh record close. The Google parent did not have a company-specific headline to point to. No Alphabet news was found for the day. Instead, its shares moved in lockstep with the market's heavyweights, which investors bought aggressively after the September jobs report raised hopes that the Federal Reserve may hold off on another rate hike.

Big Tech Rowed in the Same Direction

Alphabet was in good company. Nvidia hit a record high during the session after Morgan Stanley named it the firm's top semiconductor pick. Amazon climbed after reports that it is exploring a leaseback structure for some of its Nvidia chips, and Apple and Microsoft also closed higher. Tesla jumped after a third-quarter delivery beat, helping consumer discretionary lead the S&P 500's sectors.

Among those giants, Alphabet's advance was one of the firmer ones, outpacing Apple and Microsoft. Communication services, the S&P 500 sector that houses Alphabet, finished modestly higher. Information technology was the second-best sector of the day.

The Nasdaq-100 closed at 30,807.93, up 306.37 points, a record. The broader Nasdaq Composite rose 319.27 points to 27,190.86, touching an all-time high during the session without setting a closing record. The S&P 500 added 56.27 points to 7,722.72 and the Dow climbed 250.40 points to 51,176.96.

The Jobs Report Behind the Move

The catalyst for the whole market was the Bureau of Labor Statistics. September nonfarm payrolls rose by only 29,000, well below the roughly 84,000 economists expected. Private employers added 46,000 against forecasts of 85,000, and July and August were revised down by a combined 60,000.

That weakness changed the rate outlook quickly. The Fed, led by Chair Kevin Warsh, raised rates on September 16 for the first time since 2023 because the oil shock from the war with Iran had rekindled inflation. After Friday's report, traders sharply cut the odds of a second hike at the October 27-28 meeting. Wharton economist Mohamed El-Erian said the report is going to put the Fed definitely on hold for October.

Lower expected rates raise the present value of future profits, which tends to favour large, profitable growth companies such as Alphabet.

A Narrow Rally

Friday's gains were concentrated. Only a small minority of S&P 500 stocks trade above their 50-day moving averages, and the CNN Fear & Greed index read 31, in Fear territory. Health care was the only S&P 500 sector to fall.

The Bond Market also offered a reminder of risk. Treasury yields dipped on the jobs data but reversed to close higher, leaving the 10-year near its highest level since 2002. Both the Dow and the S&P 500 still finished the week lower, while the Nasdaq indexes ended the week ahead.

Long-Term Yields Remain the Key Risk for Mega-Cap Tech

Third-quarter Earnings season is about to begin, starting with PepsiCo on October 8, Delta on October 9 and the big banks on October 13 and 14. Analysts expect strong double-digit earnings growth for the S&P 500, with forward valuations close to their 10-year average. The Fed's October 27-28 meeting remains the main macro event, and investors will watch whether long-term yields keep climbing, a key risk for mega-cap tech valuations, including Alphabet's.