October 1, 2026
September brought investors a combination of resilient economic activity, persistent inflation, continued enthusiasm surrounding artificial intelligence, and heightened geopolitical uncertainty.
Inflation moved higher in August, with the Consumer Price Index rising 0.4% for the month and 3.4% over the prior 12 months. Gasoline prices were a significant contributor to the monthly increase, while core inflation, which excludes food and energy, rose a more moderate 0.3% for the month and 2.4% over the prior year. With inflation remaining above the Federal Reserve’s longer-term 2% objective, the Federal Open Market Committee raised the federal funds target range by 0.25% in September to 3.75%–4.00%.
Artificial intelligence continues to be an important driver of business investment and financial markets. Companies are committing substantial capital to data centers, semiconductors, cloud computing, and other infrastructure needed to support AI development. Looking ahead, investors are likely to place increasing emphasis on whether this spending ultimately translates into greater productivity, revenue growth, and corporate earnings.
Geopolitical developments have added another layer of uncertainty. Ongoing conflict in the Middle East, including tensions involving Iran, has contributed to volatility in global energy markets and renewed concerns about oil production and important shipping routes. Higher energy prices can affect the broader economy by increasing transportation and production costs and potentially adding to inflationary pressures.
As we enter the final quarter of 2026, investors are weighing these uncertainties against continued economic growth and generally healthy corporate profitability. Maintaining a diversified portfolio, staying aligned with long-term goals and risk tolerance, and avoiding reactions to short-term market movements remain important principles for long-term investors.
Year to date the Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite Index are all positive by 5.91%, 11.77% and 15.57%, respectively, year to date. The 10-year and 2-year U.S. Treasury yields at 5.26% and 4.89%, 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.
