Market Recap: October 2026

Market commentary

• U.S. GDP grew at a 3.4% annual rate in the third quarter, the fastest in a year.
• Business investment grew at a 12.7% annual rate in the third quarter, led by data centers, computers, and equipment tied to artificial intelligence (AI), though growth outside technology was limited.
• Oil prices climbed sharply again in October, and national average diesel prices held near $6.40, just pennies shy of its all-time high.
• Employers added just 29,000 jobs in September and unemployment ticked up to 4.2%, even though layoffs remained subdued.
• Despite weak sentiment, real consumer spending grew at a 3.8% annual rate in the third quarter, amid a further slide in the personal savings rate.
• Even with stubborn inflation, rising rates, and a strained consumer, few economists see a recession around the corner, as corporate profit growth has been strong.

Select economic and market data

Equities

• Rotation remained the story in equities, as investors moved away from growth and AI-related names and toward value and defensive sectors like staples, energy, and healthcare, even as broader market volatility stayed relatively subdued.

Fixed income

• Rate pressure remained widespread, pushing Treasury yields higher and raising borrowing costs across AI-related and lower-quality credit, while mortgage rates near 7.40% kept housing affordability under pressure.

Strategic outlook

• Stronger economic growth and earnings remain supportive of equities despite elevated valuations.
• Higher yields have improved forward return expectations and income potential for fixed income investors.
• Equity and fixed income volatility may remain elevated as investors balance growth, inflation, and policy and geopolitical risks.