Commentary for October, 2026

Hello all - we hope your October was a nice one.

It was a rough month for the indexes.  The Dow was actually up 1.7%, but the S&P lost 0.9%, and the Nasdaq, which has a higher concentration of tech stocks, had its worst month since March of 2025 with a drop of 5.3%.  

 

Here’s a look at how the markets moved this month:

 

Here’s a look at how the various market sectors performed this month.  We’ll note that the “Communications Services” sector that performed the worst this month includes names like Google, Facebook, and Netflix.  

 

Here’s a look at all the performance of all the stocks in the S&P 500 for the past month.

 

The astute reader will notice that there are a lot of green, positive stocks and sectors this month - yet the indexes did very poorly.  That’s because October was almost the exact opposite of September.  

In September, tech stocks did very well and the rest of the market did poorly. Tech makes up a larger percentage of the index, so the tech made the markets look good when most stocks were down.  That reversed in October.  Tech was down sharply while the rest of the market was up.  Overall, that left the major indexes down for the month.

This chart shows the performance of the tech stocks (the red line) versus the rest of the market (the blue line).

 

If every stock in the index had the SAME weighting, the market would have had a very nice month. 

 

Market analysts had been worried about the “breadth” of the market, where many stocks were down and only a few names (tech) were keeping it afloat.  But breadth improved dramatically this month.  

 

All that said, the volatility level was noticeably higher this month.

 

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BONDS

Keeping with the theme that October was the exact opposite of September, bonds were a big concern in September.  But that completely reversed this month and the bond worries dropped from the headlines.  

 

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There were two main stories this month behind the market moves - tech and oil.

Starting with tech, there are growing concerns that the amount of money companies are spending on AI and its infrastructure will not bring in enough money to justify the costs.  Companies are spending hundreds of billions on AI, but how will they make that money back?

Here’s a headline about an AI data center company spending a boatload of money building out AI, but no one knows if they can make this money back.  Combined with higher borrowing costs, its seen as an example of the problems in the broader market.  Stocks fell on the news.  

 

Troubles with the AI buildout could spill over to many other sectors.  Right now, construction of data centers is the only segment of construction that is expanding.  

 

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OIL

Oil prices and the Iran war were the other story moving the markets.  

One day, a headline might say something about how progress towards a deal is being made.  Stocks rise, oil falls.

The next day the headline might say something about how the U.S. will totally annihilate Iran.  Stocks fall, oil rises.

Now it looks like a massive attack “the likes of which the world has ever seen” will be coming after the election.  That’s not helpful for oil prices, which closed the month near the highs of the initial Iran attacks.  

 

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EARNINGS

Against this backdrop, it might be surprising that corporate earnings continue to be exceptional.  

A little more than half stocks in the S&P 500 have reported their 3rd quarter results and  according to Factset, earnings are up about 30% and revenue (what a company received in sales) rose about 12%.  A lot of this can be attributed to higher sale prices of products and not an increase in the amount items sold.  

Further, much of the growth in earnings comes from the tech industry which has very high profit margins.  

 

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FED

Switching gears, the Fed held a policy meeting this month.  They announced no changes to rates, which was largely expected.  

 

A month ago, though, conditions were very different and investors thought there was a very high chance for a rate hike at this meeting.  There’s a high chance of the Fed raising rates at their next meeting in December, but we find another rate hike this year highly unlikely.  

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INFLATION

Inflation numbers released this month showed another rise in prices.

 

 

The monthly inflation number showed another strong rise. 

 

Gas prices saw a considerable increase and was a big reason for the overall increase in prices last month.

 

These higher gas (and diesel) prices are raising transportation costs, which feeds into everything we buy.

Other basics like food continues to remain high, although they leveled off this month.

 

When excluding food and energy (what economists call the “core” inflation), prices showed another rise.

 

Here’s a look at the inflation level for businesses, which keeps seeing higher prices.

 

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, but leaned more to the positive side.

The strength of the economy - as measured by the GDP report for the 3rd quarter - showed a decent increase.  

 

Employment has been positive lately, but not at a level to get excited about.  We’re seeing data that shows few workers are losing their job, but few are being hired, as well.  

 

Both the manufacturing and service parts of our economy are expanding, though at levels slightly slower than the previous month. 

 

Retail sales showed another increase.

 

Durable goods were up slightly. 

 

The survey data showed consumer confidence improved from the previous month.

 

Small businesses were a little less optimistic.

 

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Where does the market go from here? 

It’s tough to get a good feel for the markets here.  The sharp sell-off at the end of the month made stocks more attractive, but there are a few important events in early November that will impact the markets.

First, the election on November 3rd will have an obvious impact on the markets. 

Then any attacks on Iran will also impact the markets.  

It’s very hard to tell where stocks will go, so we’ll just hang tight. 

 

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for September, 2026

Hello all - we hope your September was a nice one.

September was a sloppy month for stocks.  They finished not far from where they started, but a lot was going on under the hood.  The Dow was down 4.3%, the S&P lost 0.4%, and the Nasdaq, which has a higher concentration of tech stocks, rose 2.2%.  

We also closed out the third quarter, where the Dow lost 2.7%, the S&P gained 2.0%, and the Nasdaq rose 2.5%.  

 

Here’s a look at how the markets moved this month:

 

Here’s a look at how the various market sectors performed this month. 

 

Here’s a look at all the performance of all the stocks in the S&P 500 for the past month.

 

Notice in the charts above how many stocks and sectors were negative this month?  Many, many stocks are trading lower, but the ultra-strong tech sector makes up a large percentage of the market and has been keeping the markets higher. 

If every stock in the index had the same weighting – unlike now where tech has a higher weighting – the market would be dropping sharply (the blue line in the chart below).

 

That’s called the market “breadth,” which measures how many stocks are moving higher (or lower).  By some metrics, it’s the worst “breadth” since the dot-com bust.

 

All that said, stocks were a little more volatile for the month, but still at a relatively low level.

 

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BONDS

Bonds were the big story this month.

The yields on bonds reached either all-time highs or multi-decade highs again this month, which means it’s more expensive to borrow money - like having a higher credit card or mortgage rate.

 

When bond yields rise, their prices drop.  So in your investment portfolios, you will notice that your bond holdings likely saw losses in September.  Here’s a look at the price of the Vanguard Total Bond Index, a popular bond fund.

 

There’re several things contributing to the rise in bond yields. Very high government debt levels, high inflation, and AI-related companies taking on more debt to build out infrastructure.  

This AI infrastructure is a very interesting story.  These tech companies are taking out a lot of debt to finance the construction of the infrastructure, but few realize just how big the spending actually is.  In the chart below, you can see the spending levels are GREATER than other great infrastructure periods in the U.S. 

 

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FED

Looking again at bond yields, the level of bond yields (specifically the 2-year bond yield) is a good indicator of what the Fed will do with their rate levels.

The chart below shows when the Fed rate is BELOW the 2-year bond yield, the stock markets often rise because it’s seen as stimulative.  Then the Fed raises its rates as a result to keep the economy from getting overheated (they think this leads to higher inflation, but we disagree – it’s a conversation for another time). 

 

The Fed, indeed, did start its rate-raising cycle this month with the first rate hike since 2024.

 

The odds of another rate hike at their next meeting in October had been fairly high, but has fallen recently.

 

 

The style of the new Fed chief, Kevin Warsh, continues to be a topic of conversation.  He doesn’t talk much, not wanting the Fed to influence markets.  This has been a complaint of ours for the last, well, couple of decades.  The Fed would use its power to “jawbone” the markets to do what they wanted it to.  We are moving away from that, and that is a good thing.  

 

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OIL

Oil prices and the Iran war remain an important factor for the markets.  Oil prices popped higher this month, though they closed not far from where the month started.  

 

The amount of oil around the globe is dropping to the lowest levels in years.

 

This remains a factor - maybe the factor - in higher inflation levels.

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INFLATION

Inflation numbers released this month showed a new rise in prices.  

 

The monthly inflation number showed another strong rise. 

 

This measurement is for August, which was the first month in the last three to see a rise in gas prices.   

 

These higher gas (and diesel) prices are raising transportation costs, which feeds into everything we buy.

Shipping costs by sea have seen a sharp increase (some of this is due to the waters around Iran, too).

 

Trucking rates are rising quickly, as well.

 

Other basics like food continues to climb, with meat prices again at record highs.

 

When excluding food and energy (what economists call the “core” inflation), prices showed another rise.

 

Here’s a look at the inflation level for businesses, which saw a new rise.

 

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, but leaned more to the positive side.

Employment finally took a turn higher.

Both the manufacturing and service parts of our economy are expanding, though manufacturing was a tad weaker than last month.  

 

Retail sales showed a decent increase.

 

 

While durable goods were dead flat from last month.    

 

The survey data was pretty bad this month. Consumer confidence keeps moving lower.

 

Small businesses were a little less optimistic, too.

 

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Where does the market go from here? 

It’s tough to get a good feel for the markets here.  In the very short term - like a week or two - the odds look better for a rise.  But looking out a little longer is a little tougher to tell as no real trend is in the market.  Corporate earnings are good and the economy seems fairly decent, but random geopolitical events like Iran can have a quick impact on the markets.

One issue we talked about earlier in this commentary is the poor “breadth” of the market.  True, fewer and fewer stocks are participating in the rise.  However, you can see in the chart below that 20-day average – the shortest time period we look at – is showing an INCREASE in breadth.  That’s a good sign and continued improvement suggests a rise in the markets is more likely.   

 

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.