November 1, 2026

October highlighted the complex relationship between economic growth and financial market performance. Corporate earnings remained strong and economic activity continued to expand, but persistent inflation, elevated interest rates, and concerns surrounding artificial intelligence (AI) investments contributed to market volatility.

Third-quarter corporate earnings have generally exceeded expectations. As of late October, approximately 81% of S&P 500 companies that had reported results exceeded analysts' earnings estimates, with year-over-year earnings growth projected at approximately 31%. Despite these encouraging results, investors remain focused on elevated stock valuations and whether substantial investments in AI will generate sufficient long-term returns.

At its October 28 meeting, the Federal Reserve maintained the federal funds rate at 3.75%–4.00%, with two voting members favoring a quarter-percentage-point increase. While economic activity continues to expand at a strong pace, inflation remains elevated. This presents a challenge for policymakers, as continued economic strength may support corporate earnings while also reducing the likelihood of near-term interest rate cuts.

Looking ahead to the final two months of 2026, inflation, Federal Reserve policy, and corporate earnings will likely remain key drivers of market performance. Although economic fundamentals remain relatively supportive, uncertainty surrounding interest rates and valuations may contribute to continued market fluctuations.

We continue to believe that maintaining a disciplined, diversified investment approach is essential to achieving long-term financial objectives. Market volatility is a normal part of investing, and decisions should remain grounded in individual goals and risk tolerance rather than short-term market movements. Higher bond yields have also improved the income potential of fixed-income investments, providing additional opportunities for portfolio diversification.

As of October 30, 2026, the Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Composite Index were ahead 7.71%, 10.73%, and 9.44%, respectively, year to date. The 10-year and 2-year U.S. Treasury yields stood at 4.98% and 4.61%, respectively.
 

**This material is for informational purposes only and is not intended as investment advice or a recommendation to buy or sell any security. The information presented is believed to be reliable, but its accuracy or completeness is not guaranteed. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Any opinions expressed are current as of the date of publication and are subject to change without notice.