Monday’s services data carried a soft headline and a loud price signal. Equities looked past both. The S&P 500 rose 0.67% to about 7,774, the Nasdaq Composite gained 1.05% to about 27,477 and the Dow added 0.18% to about 51,268. The 10-year Treasury yield climbed three basis points to 5.31% on the Treasury’s par curve, from 5.28% on Friday.

1. ISM prices were the number that mattered.

The ISM services prices index rose to 74.0 in September from 72.6 in August, the highest reading since July 2022. A level that high means a large majority of purchasing managers paid more than a month earlier. Services inflation is stubborn because wages are the main cost, and the Federal Reserve, which raised rates on 16 September and meets again on 27 and 28 October, has little room to ignore it. Hotter costs keep a second hike alive, and higher expected policy rates lift the discount rate applied to future earnings. Yields moved as that logic predicts, while equities went the other way.

2. The ISM headline slipped.

The services PMI eased to 54.9 from 55.4, under consensus, though it has now stayed above 50 for 27 straight months. Business activity fell to 56.5 from 61.7 and new orders eased to 59.8. Employment rose to 50.1, back above the 50 line after two months of contraction. These are diffusion indexes, so they measure how many firms improved, not by how much.

3. The S&P Global survey ran hotter.

The final S&P Global services PMI came in at 58.8, a touch above the 58.7 flash estimate and the forecast. The calendar’s previous figure of 58.7 is that flash. Against the August final of 56.5, the sector gained 2.3 points, and the reading is the strongest since July 2021. New orders grew at their fastest pace in over four years, hiring was the quickest since June 2022 and input costs reached their highest since November 2022. The two surveys disagree on the pace of growth but agree that costs are rising.

4. Technology drove the tape.

Gains were led by technology and communication names with Microsoft, Alphabet and Nvidia among the leaders. The AI trade absorbed the rise in yields, and positive earnings sentiment ahead of third-quarter results added support. Consumer and housing-related shares lagged, which fits a market where borrowing costs keep rising.

The data did not explain the rally. A 74.0 prices reading would normally weigh on stocks, yet buyers concentrated in the largest growth names. If yields keep climbing toward the October meeting, that concentration becomes the part of the market most exposed to a rate repricing.

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