The stock market had a productive first session of the week, supported by early tech leadership that remained solid even as participation broadened considerably throughout the session. By the close, the Nasdaq Composite (+1.1%) had established fresh record highs, the S&P 500 (+0.7%) notched a solid gain, and the DJIA (+0.2%) reversed the early weakness that kept it lower for the first half of the session. The Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.4%) followed a similar trajectory, with the major averages finishing just off session highs following some modest selling in the final minutes.

Despite stocks opening broadly lower, the S&P 500 and Nasdaq Composite moved higher out of the gate amid early strength in mega-cap and select tech stocks. Meta Platforms (META 741.90, +13.82, +1.90%) was among the notable "Magnificent Seven" gainers, extending its recent run of outperformance following the launch of its Muse AI agent and keeping the communication services sector (+1.1%) near the top of today's leaderboard.

The information technology sector (+0.7%) also provided steady support, although performance beneath the surface was mixed. Software stocks were a notable source of strength, with the iShares GS Software ETF rising 1.3%. PTC (PTC 192.26, +48.23, +33.49%) surged after Schneider Electric (SBGSY 61.50, -6.90, -10.09%) agreed to acquire the company for $205 per share in cash, while Microsoft (MSFT 525.18, +7.65, +1.48%) advanced following an upgrade to Buy from Hold at Melius.

Semiconductor stocks were more mixed, leaving the PHLX Semiconductor Index up just 0.3%. NVIDIA (NVDA 238.90, +4.95, +2.12%) was among the notable gainers, while Taiwan Semiconductor Manufacturing (TSM 485.91, +13.13, +2.78%) reached fresh 52-week highs after Elon Musk said there are talks about potentially utilizing the company for Terafab's Texas chip project. The prospect of TSM involvement weighed on Intel (INTC 116.19, -3.14, -2.63%).

Mega-cap strength remained an important source of support throughout the session, reflected in a 1.0% gain for the Vanguard Mega Cap Growth ETF. SpaceX (SPCX 171.09, +12.13, +7.63%) added to the trend and contributed to the outperformance of the Nasdaq Composite. 

Unlike much of the recent action, however, the broader market steadily caught up with those early leaders rather than falling further behind. That shift was especially evident in the S&P 500 Equal Weighted Index, which recovered from an early decline to finish up 0.5%, nearly matching the gain in the market-cap-weighted S&P 500. The Equal-Weight S&P 500 entered today's session riding a seven-week losing streak, making the improvement in participation particularly notable after an extended stretch in which index-level gains have been disproportionately driven by the market's largest stocks.

The broadening was also evident across the sector standings, with ten of the 11 S&P 500 sectors finishing higher. The real estate sector (-0.4%) was the lone decliner, while the industrials sector (+0.1%) was another relative underperformer as C.H. Robinson (CHRW 140.61, -17.11, -10.85%) fell sharply after agreeing to acquire RXO, Inc. (RXO 28.64, +5.26, +22.50%) in a stock-and-cash transaction valued at $5.8 billion.

Crude oil provided a more favorable influence as the session progressed. After some early choppiness, WTI crude moved steadily lower during the afternoon and ultimately settled $1.77 lower (-1.9%) at $89.33 per barrel. Positive headlines surrounding improved export flows from the Middle East continued to offset the lack of diplomatic progress between the U.S. and Iran.

The decline in oil did not translate into meaningful relief from another recent market headwind, however, as Treasury yields remained elevated. The 10-year note yield settled three basis points higher at 5.31%, yet equities largely shrugged off the continued rate pressure and spent much of the afternoon extending their gains. That ability to advance in the face of higher yields was particularly noteworthy given how heavily elevated rates have weighed on the broader market recently.

Monday therefore offered a notable break from the market's recent pattern. Mega-cap growth stocks remained firmly in the lead early and continued to perform well into the close, potentially reflecting confidence in their earnings prospects ahead of the upcoming reporting season, but the broader market increasingly joined the advance as the day progressed. The Equal-Weight S&P 500 matching the cap-weighted index despite another rise in Treasury yields was an encouraging development after weeks of narrow leadership, although one session is not enough to establish a lasting change in that trend.

U.S. Treasuries began the week with losses that sent yields on the 10-year and 30-year notes to fresh highs for the year while the front end outperformed but could not avoid a lower finish. The 2-year note yield settled up one basis point to 4.83%, and the 10-year note yield settled up three basis points to 5.31%. 

• Nasdaq Composite: +18.2% YTD
• Russell 2000: +14.7% YTD
• S&P 500: +13.6% YTD
• S&P Mid Cap 400: +11.3% YTD
• DJIA: +6.7% YTD

Reviewing today's data: 

• Sep S&P Global U.S. Services PMI - Final 58.8 (Prior 58.7)
• Sep ISM Non-Manufacturing Index 54.9 (Briefing.com consensus 55.7; Prior 55.4)
  • The key takeaway from the report is the understanding that the prices paid by services organizations continue to increase. In turn, that will continue to feed concerns about pass-through effects for consumers.