Wednesday, September 30, 2026. Wall Street spent the morning doing something it has not done much of lately: exhaling. A cooler-than-expected reading on August inflation landed before the bell, and by late morning the tech-heavy Nasdaq Composite was up about 1%, the S&P 500 was higher by roughly 0.6%, and even the Dow Jones Industrial Average, which lagged all morning, crept into the green, according to live market coverage.
The Nasdaq touched a session high of 27,096 in the late morning, Investor’s Business Daily reported, as traders took the inflation surprise as permission to buy growth again. The S&P 500 reached 7,713.97, up about 0.56%, while the Dow hovered near 51,419, up roughly 0.14%, TradingNews reported.
The catalyst was the August Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge. Core PCE, which strips out food and energy, rose 3.0% year over year in August, below the 3.3% consensus forecast, while headline inflation came in at 3.4% versus 3.7% expected, CoinWy reported. The number is still well above the Fed’s 2% target, but it was the first genuine downside surprise in weeks, and it immediately cooled bets on another rate hike. Markets now see roughly a 45% chance of a 25-basis-point hike at the Fed’s October 27-28 meeting, down from about 70% on Monday, according to LSEG data cited by Morningstar.
The bond market felt the shift first. The 2-year Treasury yield, the slice of the curve most sensitive to Fed expectations, dropped more than 6 basis points to 4.827%. The 10-year fell to around 5.22%, backing away from Tuesday’s 5.29% intraday peak, its highest level since 2007. The 30-year eased to about 5.58% after touching 5.62% on Tuesday, a 24-year high, TradingNews reported.
Microsoft was the face of the midday rally. Shares rose 1.9% and hit a 52-week high of $519.83, with the stock’s relative strength line pushing into new-high territory, a sign it is outperforming the broader market. Fiscal first-quarter earnings are expected to show 14% growth to $4.71 a share on $90.6 billion in revenue, Investor’s Business Daily reported. Hewlett Packard Enterprise gained 4.92%, while Moderna slid about 6%, TradingNews reported.
Energy kept climbing. West Texas Intermediate crude rose more than 1% to about $91.20 a barrel, while Brent approached $99, Investor’s Business Daily and MarketWatch reported. The weekly inventory report added fuel: U.S. crude stocks rose 922,000 barrels to 427.3 million in the week ended September 25, against expectations for a 264,000-barrel draw, while gasoline and distillate inventories fell, the Energy Information Administration said, per the Economic Times live blog.
Bitcoin joined the risk-on mood, surging above $85,000 before cooling to around $83,758, CoinWy and Investor’s Business Daily reported. The VIX fell 2.24% to 15.68, remarkably calm for a month in which the 30-year yield blew through 5.6%, TradingNews reported.
Why it matters: one soft inflation print does not end the fight, and 3.4% headline inflation is still a problem for anyone paying rent or buying groceries. But markets were braced for the worst, and getting less-bad was enough to loosen the fear of an October hike. The next judgment comes quickly: Micron reports earnings after the closing bell, and Richmond Fed President Thomas Barkin, Chicago’s Austan Goolsbee, and Minneapolis’s Neel Kashkari all speak today, offering the first official reactions to the inflation surprise, TradingView reported.
