September Better Than History – Entering October With Tech Breakout

Market Commentary – October 5, 2026

The month of September historically is the worst performing month with an average S&P 500 decline of 2.6% over the past five years. This year, the S&P 500 fell only 0.45% and the Nasdaq 100, which is technology heavy, rallied 3.2%. October traditionally is a good buying month with the seasonal year-end rally beginning the last week of October. Technology has broken out to new highs, which is a strong bullish signal that the year-end rally may have already begun.

Employment Report Showed Weakness In September

The Federal Open Market Committee (FOMC) raised the fed funds rate 25 basis points on September 16. Their comments characterized economic activity as “expanding at a solid pace,” while Federal Reserve (Fed) Chair Kevin Warsh stated that “the labor side of the Fed’s congressional remit is in good shape.” This position has largely driven the market’s concern that the Fed is going to continue to raise interest rates. But Friday’s report on nonfarm payrolls by the Bureau of Labor Statistics (BLS) was considerably weaker than expected, and the unemployment rate ticked up one tenth of a percent to 4.2%. More worrisome, however, was civilian employment from BLS’s Household Survey – which measures a wider group, including farmers, self-employed people, and sole proprietor firms. Although the Household Survey captures only about 2.6% more workers than nonfarm payrolls (roughly 4 million more people), civilian employment is more sensitive to economic changes than nonfarm employment, which is based on employers’ reports. Friday’s data calls into question the Fed’s assumption that it need not worry about economic expansion.

The employment landscape is changing in ways that may require us to rethink traditional models. Two important factors – immigration trends and the retirement of baby boomers – are reshaping the pool of available workers. It may take time before strategists and markets fully understand how these structural changes affect employment and what they mean for interpreting labor market data.