19% Hike Odds. Two New Records

Wall Street got the mix it wanted Tuesday. October hike odds fell to 19.4%. Treasury yields eased. Oil held near $100. AMD jumped 2.8%. Marvell surged 5.8%. And both the S&P 500 and Nasdaq closed at records.

The S&P 500 gained 0.58%. The Nasdaq rose 0.45%. The Dow added 253 points. Rate pressure eased. AI kept running. Stocks broke higher.

Tuesday, October 6

Tuesday came down to three things. Fed pressure eased. Treasury yields fell. AI stocks kept climbing. That was enough to send two major indexes to records. The market is still dealing with Treasury yields above 5%. But the direction changed. The 10-year moved lower. October hike odds moved lower. Oil stopped surging. That gave growth stocks room to keep running.

The biggest change is still happening in Fed pricing. Markets now put the chance of another October hike at just 19.4%. One week earlier, another hike looked much more likely. Earlier this month, the odds were near 70%. That is a major reversal.

The weak September jobs report started the move. Payrolls rose just 29,000. Unemployment climbed to 4.2%. Softer inflation data helped too. The market now sees an October pause as the clear base case. That has removed one major source of pressure from stocks.

The S&P 500 closed at 7,818.95. That was an all-time high. The Nasdaq also reached a record at 27,599.79. The Dow gained 253.14 points.

More important, the rally was broad. Ten of the S&P 500’s 11 major sectors finished higher. Advancing stocks beat decliners by nearly 2 to 1 on the NYSE. That is healthier than many recent record days. The market was not relying on one or two giant tech stocks. More sectors joined the move.

The bond market also helped. The 10-year Treasury yield eased to about 5.28%. The 30-year slipped to roughly 5.65%. Those yields are still high. Very high. But for stocks, direction matters. A move lower reduces some pressure on mortgage rates. It helps company borrowing costs. And it makes government bonds slightly less competitive with equities.

For expensive growth stocks, even a small decline in yields can matter. Tuesday proved it.

AMD gained 2.8%. The company plans to sharply increase chip supply in 2027. The reason is simple. AI demand remains strong.

Data centers need more computing power. Customers want more accelerators. And chipmakers are racing to add capacity. That keeps AMD at the center of the AI buildout. It also gave semiconductors another strong session.

Marvell Technology jumped 5.8%. The company raised its 2028 revenue forecast. Data-center demand drove the increase. That matters because AI spending is still showing up in real company forecasts.

Not just stock prices. Not just headlines. Revenue expectations are moving higher. That gives investors more reason to stay in the trade.

Constellation Energy surged 12.3%. Alphabet signed a large power agreement with the company covering 3,590 megawatts. That number matters. AI is no longer only a chip story. It is becoming a power story.

Data centers use enormous amounts of electricity. The larger AI systems become, the more power they need. That is creating demand for nuclear power, utilities and grid infrastructure. Tuesday showed investors are starting to price that in.

The strongest part of Tuesday was the breadth. Ten of the S&P 500’s 11 sectors gained. That is important. Much of this year’s market strength has come from a small group of mega-cap technology companies.

Tuesday was different. Utilities rose. Technology rose. Communication services rose. Industrials participated. The rally spread. That makes the record close more durable than one driven by only a handful of names.

Oil was relatively calm. Brent settled at $100.58. WTI closed at $89.44. That still leaves crude expensive. But there was no fresh spike. That matters because oil has been one of the biggest sources of inflation fear.

A stable Brent price near $100 is easier for markets to absorb than a jump toward $105 or $110. It keeps pressure on inflation. But it does not create a new shock.

Gold rose about 0.7% to roughly $4,168 an ounce. Treasury yields eased. The dollar fell about 0.3%. Both helped. Gold usually struggles when yields and the dollar rise together. Tuesday gave it the opposite mix. Lower yields. A softer dollar. Gold moved higher.

The market is now turning toward third-quarter earnings. Expectations are high. Very high. That matters because Treasury yields are still above 5%. Stocks need strong profit growth to justify current prices.

AI companies need to prove that huge spending is producing huge revenue. Energy companies need to prove higher oil is helping profits. Banks need to show that high rates are still supporting margins. Records are easy to celebrate. Earnings now have to defend them.

Tuesday left markets with a short list of hard numbers:

Tuesday gave Wall Street exactly what it wanted. October hike odds fell to 19.4%. Treasury yields eased. AI stocks kept climbing.

The rally spread across almost the entire S&P 500. And two major indexes closed at records. The bond problem is still there. The 10-year remains above 5%. But the Fed looks less likely to add more pressure this month. And investors still believe AI earnings can outrun high rates. Rate pressure eased. AI broadened. Stocks hit records.