Stocks fought back from an early yield scare to close October's first session modestly higher, with chips and small caps doing the heavy lifting.
The 10-year yield spiked intraday to its highest level since 2002 near 5.33%, dragging the S&P and Nasdaq into the red before both reversed to close green as long rates retreated off the highs; the Dow finished essentially flat. September ISM manufacturing printed 54.5%, a ninth straight month of expansion but barely changed from August, while the prices-paid component jumped sharply, keeping the inflation debate alive even as growth holds. Micron's beat-and-raise sent the stock sharply higher and dragged semis and the broader Nasdaq up into the close. Nike beat on earnings but reversed lower after hours on a revenue decline, a reminder that beats without top-line growth aren't being rewarded.
Leadership was narrow: utilities and chips did the work, energy lagged as oil gave back gains, and breadth stayed soft with decliners outpacing advancers for most of the session before the late bid. The VIX ticked up into the mid-16s but remains low. Price held above the indicative gamma flip near 7,640 and closed back under the 7,700 call wall that's capped the index for several sessions, with the August closing high near 7,800 still the magnet overhead if dealers flip long gamma. QQQ held support in the 605 area on the Micron bid.
The risk: Friday's jobs report is the swing factor overnight — a hot print reignites the yield spike just walked back and caps the call wall; a soft print does the opposite and opens a path toward 7,800. Watch 10-year yield 5.30%-5.35% as the line in the sand.