Two markets looked at the same data Monday and reached opposite conclusions. Bond traders saw an inflation problem getting worse. Equity traders bought technology stocks to a record.
The Nasdaq Composite closed at 27,477.31, up 286.45 points or 1.05%, its first record finish of the month. The S&P 500 added 51.25 points to 7,773.97, a gain of 0.66%. The Dow Jones Industrial Average managed 90.94 points to 51,267.90, up 0.18%, while the Russell 2000 rose 0.73% to 2,853.65.
Treasuries went the other way. The 10-year yield jumped about 7 basis points to 5.347%, its highest level since April 3, 2002, according to CNBC. The 30-year bond yield climbed more than 7 basis points to 5.702%, a level last seen in late May 2002. Both moves came directly after the morning's services data.
Services Prices Reach Highest Since July 2022
The Institute for Supply Management reported that its Services PMI registered 54.9% in September, down 0.5 percentage point from August's 55.4% and the 27th consecutive month of expansion. The headline number was not the story.
The Prices Index rose 1.4 percentage points to 74.0%, the highest reading since July 2022, when it hit 74.5%. That index has now stayed above 60% for 22 straight months. Steve Miller, chair of the ISM Services Business Survey Committee, oversees the survey panel whose members pointed repeatedly to freight and import costs.
"The high cost of diesel fuel has increased the cost of freight dramatically," one respondent reported. Another said shipping containers from overseas were "double the cost, causing price increases." A third flagged tariffs: "Tariffs are continuing to have an effect on when we can get our equipment; lead times are longer and any additional cost affects the bottom line."
The composition underneath was mixed. Business Activity dropped 5.2 points to 56.5%, the sharpest decline in the report, while New Orders eased 1.1 points to 59.8%. Employment crossed back above the breakeven line at 50.1%, up 2.3 points. Backlog of Orders rose a point to 56.6% and Inventories gained 1.1 points to 57.8%.
The weakest line was external demand. New Export Orders fell 9.4 points to 46.9%, the first contraction in eight months. Imports slipped 3.4 points to 52.9%.
Tech Leads, Commodities Diverge
Nvidia closed at an all-time high near $238 a share, and Taiwan Semiconductor touched intraday records. SpaceX rose 5% after a bullish Morgan Stanley call. Latin American names were the day's standouts, with Nu Holdings up 13.18% and MercadoLibre gaining roughly 9%.
Commodities told the disinflation side of the story. November crude fell $1.91, or 2.10%, to $89.20 a barrel. Gold edged up $5.00 to $4,167.30 an ounce, a gain of 0.12%. Bitcoin slipped 0.15% to $85,690.
"The market has had every reason to sell off, and it hasn't sold off yet," Sean McLaughlin, chief options strategist at All Star Charts, told Yahoo Finance.
October Off the Table, December Still Live
Monday's data did little to change a rate picture already reset by Friday's payrolls report, which showed just 29,000 jobs added in September. Traders continue to treat the October 28 meeting as a hold. December is where the argument sits: CME FedWatch odds for a quarter-point hike by then remain above 75%, while Kalshi has the December 9 decision closer to 65%.
The services prices index gives the hawks their strongest recent data point. Whether it survives contact with a labor market adding fewer than 30,000 jobs a month is the question the next CPI report will have to answer.
Sources: Institute for Supply Management (September 2026 Services PMI Report, via PR Newswire); CNBC; Yahoo Finance; CME FedWatch; Kalshi