Wall Street ended last week positively following a softer-than-expected jobs report, but the week ahead is marked by a light calendar of earnings and economic data. With the third-quarter earnings season on the horizon and conference season winding down, traders are closely watching geopolitical developments, especially those related to oil exports through the Strait of Hormuz and military activity in the Middle East. Last week's deployment of an additional U.S. aircraft carrier to the region surged oil prices and bond yields, highlighting how international events remain key drivers of market sentiment.

Despite rising 10-year Treasury yields hitting multi-decade highs, the stock market has shown resilience, with the Nasdaq Composite reaching an intraday record high. However, the market's gains are narrowly concentrated in a few leading tech stocks, notably Nvidia, which also hit an all-time intraday high. The S&P 500, weighted by market capitalization, is down about 1% from its August peak, while the equal-weighted S&P 500, reflecting broader stock performance, has fallen nearly 6%, illustrating increased market divergence.

Higher bond yields present challenges, making corporate financing costlier, dampening consumer demand, and reducing the present value of future earnings. These pressures have affected rate-sensitive sectors, but the overall market hasn’t broken down yet. Investors are advised to remain cautious, maintaining cash reserves (currently near 12%) to capitalize on potential pullbacks, especially as the market nears historic highs ahead of earnings season.

Key events to watch this week include Marvell’s investor day on Tuesday, where updates on its AI infrastructure business and long-term financial targets may influence AI stocks broadly. Several companies, including Constellation Brands, Levi Strauss, PepsiCo, and Delta Air Lines, are scheduled to report earnings, with Delta’s outlook on fuel costs and consumer travel demand garnering particular attention. On the macroeconomic front, ISM Services PMI data, minutes from the Federal Reserve’s September meeting, and the University of Michigan consumer sentiment index will provide further insight into the economic landscape.