Thirty-nine years ago today, the Dow lost 22% in a single session. They still call it Black Monday. Today, on the anniversary, the Nasdaq bounced 1.1% — and October hike odds fell from 50% to under 20% after Treasury Secretary Bessent called the CPI spike an "energy shock." If he's right, the inflation scare was a false alarm. If he's wrong, this bounce is borrowed time.
The Close
Bounce day. The Nasdaq gained 1.1% to about 26,427. The S&P 500 rose 0.4% to about 7,695. The Dow finished flat at 51,966, held back by financials, which fell nearly 1%.
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| Nasdaq | 26,427 | +1.1% | ||
| S&P 500 | 7,695 | +0.4% | ||
| Dow Jones | 51,966 | −0.1% | ||
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| Consumer Disc | +1.8% | |||
| Technology | +1.3% | |||
| Materials | +0.1% | |||
| Comm Services | −0.2% | |||
| Consumer Staples | −0.5% | |||
| Health Care | −0.6% | |||
| Energy | −0.6% | |||
| Industrials | −0.6% | |||
| Financials | −0.8% | |||
| Real Estate | −1.2% | |||
| Utilities | −2.0% | |||
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The rebound was narrow. Consumer discretionary led at 1.8% — that's Tesla, up 3.8%. Technology gained 1.3%. But eight of eleven sectors finished red.
This wasn't the whole market rallying. It was tech and consumer names rallying while everything else sat out.
Utilities fell 2.0% — the worst sector. Financials dropped 0.8%. Real estate lost 1.2%. The value trade that held up all last week reversed in a single session as money came right back out of banks and into the Teslas and Nvidias.
Today is the 39th anniversary of Black Monday — the 1987 crash that remains the biggest single-day decline in Dow Jones history. Mike Zaccardi marked it on social media with the next morning's New York Times front page. Beneath the enormous crash headline, a smaller one asked the question investors are always asking: what comes next?
What The Market Is Pricing In
Treasury Secretary Scott Bessent said something this morning that changed the math. He called the September CPI increase an "energy shock" — his words — and separated it from the underlying inflation trend. In plain English: the gas price spike was a one-time event driven by the Hormuz disruptions, not a sign that inflation is re-accelerating across the economy.
The futures market listened. October hike odds fell from 50% — where they sat after Wednesday's CPI — to under 20%. That's a round trip in two weeks.
Two weeks ago, the market was pricing 17% odds. Then the CPI hit and it jumped to 50%. Now it's back below 20%.
When the government's top financial official tells the market that the inflation spike was caused by something specific and temporary, it gives the Fed an excuse to wait. And when the Fed has an excuse to wait, the math on growth stocks changes — future earnings stop getting marked down. On Wall Street they call this a dovish pivot signal — when the tone shifts from "we're tightening" to "we're watching." The repricing pauses.
October hike odds fell from 50% to under 20% in three trading days. The entire inflation scare that drove the S&P down 1.1% on Wednesday, sent the Nasdaq into its worst week since June, and pushed the VIX above 20 — all of that got walked back by one phrase from the Treasury Secretary. The question is whether the data will confirm his read or contradict it.
The Nasdaq bounced 1.1% today, but it's still down 4.5% from last week's peak. The S&P is still 1.5% below its record. The bounce doesn't erase the selloff — it just pauses it. The next earnings reports will tell you whether the market believes Bessent or just wants to believe him.
I saw a version of this in late 2022. The market rallied hard every time a Fed official hinted at a pause, then sold off again when the data came in hot. The rallies lasted two to three weeks before reality caught up. The pattern didn't break until the data confirmed the pivot — until then, every bounce was a trade, not a trend.
What's Next
Three things I'm watching this week:
01 — Netflix earnings — Tuesday, October 20 after the close
The first mega-cap tech report since the selloff. If Netflix beats and holds its gains on Wednesday, it breaks the TSMC pattern — where good earnings got sold. If it beats and fades, the multiple compression story isn't over, and Bessent's "energy shock" framing won't be enough to hold the rally.
02 — Tesla earnings — Thursday, October 22
Tesla reports after the close. The stock gained 3.8% today, leading the rebound. Elon Musk has the most to prove of any CEO reporting this week — the stock is a barometer for how much risk the market is willing to take on growth names at current valuations.
03 — Existing home sales — Thursday, October 22 at 10:00 a.m. ET
With the 10-year above 5.20% and mortgage rates near 7.5%, existing home sales will tell you whether the housing market is still functioning at these rates. A number below 3.8 million annualized would be the lowest since the pandemic. The housing market is where high rates hit first and hit hardest.
The Nasdaq bounced today because someone at Treasury said the magic words. The earnings this week will tell you whether the market earned the bounce or just borrowed it.
That's it for today. See you tomorrow after the close.
