Fed hike odds near 70% put the S&P 500 on edge
Published on September 28, 2026
Wall Street finished last week in the green and none of it fixed the underlying problem. The 10 year Treasury yield is parked at 5.18%, its highest since 2007, and traders now put close to 70% odds on another Fed hike at the 28 October meeting. That leaves the S&P 500 and the Nasdaq heading into a week where two prints decide everything: PCE on Wednesday and payrolls on Friday.
Friday was good, the week still looks like a trap
All three big indices closed higher. The Dow added 478.64 points, or 0.93%, to 51,828.62, the S&P 500 gained 0.51% to 7,743.41 and the Nasdaq Composite 0.48% to 27,068.72. The Dow also snapped a three week losing streak, as CNBC reported.
Oil did most of the work. WTI dropped 2.33% to 92.41 dollars and Brent 2.14% to 104.32 dollars on reports of talks around the Strait of Hormuz. Cheaper crude means less price pressure, and equities took the gift.
The relief did not survive the weekend. New York crude is back above 93 dollars this morning, Asia is lower with the Kospi down 2.4%, and US futures are following. The S&P 500 contract is off 0.29% and the Nasdaq 100 0.31%.
The Fed still sets the tone for the indices
The policy rate moved up to the 3.75% to 4.00% range on 16 September. That was the first hike since 2023, and the Fed signalled that one more step this year is still on the table.
Bonds took that seriously. The 10 year ended Friday at 5.18% and the 30 year is hovering near 5.52%, the highest since 2004. Rick Rieder, who runs fixed income at BlackRock, described the move as an eye opener rather than a crisis. For anyone trading indices the translation is simple. The risk free rate is climbing, so the multiples investors pay for equities get harder to defend.
The gap in sentiment is the striking part. The VIX closed Friday at 14.87, near its low for the year, while CNN Fear and Greed sits at 37, squarely in fear. The stress lives in rates, not yet in stocks. That split rarely lasts.
What PCE and payrolls can do to the S&P 500
August core PCE lands Wednesday and is forecast at 0.3% month on month after 0.2%, per the consensus cited by FXEmpire. On a yearly basis the gauge is still running at 3.3%, a long way from the 2% target.
September payrolls arrive Friday with a forecast of 98,000 jobs after 162,000 in August. A soft number hands the Fed an excuse to wait. A firm number with rising wages makes the October hike close to automatic.
In between, 22 Fed speaker appearances are scheduled, including Waller, Goolsbee and Kashkari. That is a lot of intraday headline risk for index traders. Previous sessions are covered in our market briefings.
Key levels today
| Instrument | Level (support / resistance) | Change (Friday close) | Scenario / What to watch |
|---|---|---|---|
| S&P 500 | Resistance 7,750 then 7,781, support 7,578 | +0.51% to 7,743.41 | A close above 7,781 restarts the rally, a slip under 7,578 opens the correction |
| Nasdaq Composite | Support 26,800, the resistance it just broke | +0.48% to 27,068.72 | While 26,800 holds the trend stays up, below it the signal flips |
| US 10 year yield | Reaction zone 5.00%, 2026 peak 5.23% | +2 basis points to 5.18% | Above 5.23% equities hurt, a drop back under 5.00% gives them room |
| Gold (XAU/USD) | Support 4,300 dollars, resistance 4,350 | +0.54% to 4,321 dollars | A break of 4,300 if real yields climb, 4,400 in play if PCE disappoints |
Index levels come from the technical work of Michael Boutros, senior technical strategist at Forex.com.
Economic calendar
- Tuesday 29 September, 16:00 Paris: consumer confidence and JOLTS. If openings drop again, rate hike bets cool and the indices get some air.
- Wednesday 30 September, 14:30 Paris: August core PCE. A 0.4% print or higher sends the 10 year toward 5.25% and the S&P 500 down to test 7,578. A 0.2% print puts 7,781 back within reach.
- Thursday 1 October, 16:00 Paris: September ISM manufacturing. A reading below 50 with prices paid rising would be the worst mix for equities.
- Friday 2 October, 14:30 Paris: US payrolls. Above 150,000 jobs and the October hike becomes the base case. Below 60,000 and the debate reopens.
The bottom line
Wall Street won last week but not the rate fight, and a 10 year at 5.18% keeps a lid on the indices. Wednesday PCE and Friday payrolls will decide whether the S&P 500 finally clears 7,781 or heads back toward 7,578.
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This is not investment advice.