Polymarket traders assign 70% odds to S&P 500 up open

Polymarket traders are assigning a 70% probability that the S&P 500 will open higher on October 2, according to the platform's "S&P 500 (SPX) Up or Down on October 2?" contract. This bullish sentiment emerges as U.S. stock futures trend higher early Friday, with investors weighing the upcoming September jobs report against escalating bond market volatility and expanding U.S. sanctions on Iran.

The market is currently balancing positive index performance against historic Treasury yields. Peter Schiff noted that the current U.S. national debt stands at $40.1 trillion, with an interest rate of 5.33%. He calculated that servicing this debt would cost $2.14 trillion annually, a figure he described as exceeding Social Security expenditures. This debt burden represents a significant headwind for equity markets despite double-digit corporate earnings growth helping to withstand rising yield pressure.

Jurrien Timmer of Fidelity highlighted the mechanical impact of rising yields on stock valuations using a discounted cash flow model. Timmer explained that higher yields decrease the present value of future cash flows, which typically pressures valuations. He expects that if the 10-year yield pushes toward 6%, the stock market's valuation multiple could compress from current levels of 19 to 20 times earnings down to roughly 16 times. Under such conditions, equities would need to rely heavily on robust earnings to offset the contraction in valuation multiples.

On Thursday, broad market ETFs closed higher. The SPDR S&P 500 ETF Trust rose 0.18% to $763.99, while the Invesco QQQ Trust ETF gained 0.31% to $742.03. The State Street SPDR Dow Jones Industrial Average ETF Trust ended the session 0.041% higher at $508.62. On Polymarket, the contract for October 1 resolved as "Up" and recorded total trading volume of $43,357.