Monthly Market Insights

October 2026

Energy, Yields and Geopolitical Development

Despite the persistent closure of the Strait of Hormuz and a September marked by broad equity pressure, major indices remain meaningfully higher on the year. The S&P 500 has gained approximately 14% year-to-date and currently sits near 7,800, while the Nasdaq has advanced roughly 18% on continued technology sector strength. The Dow Jones Industrial Average lagged in September, declining approximately 4% on the month as rising yields weighed on rate-sensitive sectors.

Energy prices remain a central concern: Brent crude continues to hover between $104 and $108 per barrel—roughly $44 above year-ago levels—and the EIA projects this elevated range will persist through the fourth quarter. Retail gasoline averages near $3.91 per gallon nationally, while heating oil is running more than 30% above last winter’s levels, adding notable pressure to household budgets as the season changes.

The administration’s recent arrangement to allow a limited volume of Russian diesel into global markets was framed as a price relief measure, though the market reaction has been modest. Analysts broadly characterize the volumes involved—approximately 4 million tons phased in over the coming months—as insufficient to significantly alter global supply dynamics, and uncertainty around delivery capacity has tempered expectations further.

Of greater consequence has been the sharp move in U.S. Treasury yields: the 10-year briefly reached 5.35%, its highest level since 2002, before settling near 5.24%. The Federal Reserve raised its target rate to 3.75%–4.00% in September—its first increase since 2023. Core PCE inflation holds near 3.0% and headline, including food and energy, sits at approximately 3.4%. The steepening yield curve reflects a broader market reassessment of the inflation and fiscal outlook and marks a significant reversal from the rate-cut expectations that prevailed earlier this year.

We remain cautious in our overall positioning. Elevated energy costs, a re-accelerating rate environment and persistent geopolitical uncertainty are headwinds we believe are not yet fully reflected in current equity valuations. Our portfolios remain diversified with reduced exposure to the technology sector relative to benchmark weightings. A resolution to the conflict in the Middle East or a substantial deceleration in inflation would represent significant positive catalysts, and we will adjust our positioning accordingly as conditions warrant.

As always, we appreciate your continued trust and are available to discuss your portfolio or any questions regarding your financial wellbeing.

-The Axiom Team

U.S. and Canadian Markets

Stocks were mixed in the third quarter as economic, geopolitical, and corporate earnings news pushed the broad market higher while weighing on the Dow Industrials.

The Standard & Poor’s 500 Index gained 2.03 percent, while the Nasdaq Composite rose 2.47 percent. However, the Dow Jones Industrial Average fell 2.70 percent. The S&P/TSX Composite Index picked up 1.09 percent._1,2

A Jumbled July

Stocks were mixed in July as investors weighed a cross-current of news on the outlook for artificial intelligence (AI) spending and Q2 corporate reports. As the month closed out, mixed Q2 corporate reports from four influential tech companies pushed and pulled stock prices. But chip stocks led an enthusiastic rally over the last two days of the month, which was enough to push the Dow into the green and pare losses for the S&P and Nasdaq._3,4

Sleepy August

Renewed enthusiasm for AI helped stocks in August as investors pushed through mixed economic signals. But for most of the month, stocks were locked in a sleepy summer trading range. Over the last full week of the month, the three major averages looked past a slightly warmer-than-expected inflation report and focused on upbeat AI-related Q2 corporate reports._5,6

A Split September

Stocks were mixed over the final month of the quarter, even as investors continued to show interest in the tech-heavy Nasdaq. Most of the attention, however, shifted to bonds with yields climbing to multi-decade highs. During the month, investors also managed AI safety concerns and the Federal Reserve’s quarter-percentage-point increase in short-term interest rates.₇

But the quarter ended on a high note after a revision to Q2 gross domestic product (GDP) showed the economy grew much faster than originally thought.₈

U.S. Sectors

Four of the 11 S&P 500 Index sectors advanced over the quarter. Energy (+16.48 percent) was far and away the best-performing S&P 500 sector, supported by the steady rise of oil prices in Q3. Health Care (+6.55 percent), Communication Services (+3.92 percent), and Information Technology (+2.86 percent) also posted solid gains.₉

The remaining seven sectors underperformed the S&P 500. Financials (-0.04 percent) went sideways over the quarter, while Consumer Staples (-2.34 percent), Materials (-3.75 percent), Real Estate (-6.30 percent), Consumer Discretionary (-6.99 percent), and Industrials (-9.61 percent) were under pressure. Utilities (-12.38 percent) fell the farthest.₉

Canada Recap

The S&P/TSX Composite Index posted a modest gain, with energy, materials, and financial names providing leadership during the quarter.₁₀

Energy and materials names led in July, but a late-month rally in tech and financials added to gains. A stronger-than-expected employment report helped sentiment.₁₁

In August, mining stocks set the pace early in the month, triggering a string of record closes for the TSX. Energy stocks also rallied as investors focused on higher oil prices amid Middle East uncertainty, while improved bank earnings boosted financials. A stronger-than-expected Q2 GDP report supported the rally._12,13,14

Stocks were under pressure throughout September. U.S.-Canada trade tension, a hawkish U.S. Fed rate hike, and a sharp reversal in gold prices combined to sour sentiment. A brief rebound late in the month faded as gold, financials, and energy names were under pressure._15,16,17

What Investors May Be Talking About in October

In the month ahead, expect to hear more about the upcoming U.S. midterm elections and how the results will shape Washington’s focus for the next two years. But it is important to separate what it means for the country from what it means for your portfolio.

Midterm election cycles often follow a similar path. The party in power warns that losing seats would be a setback, while the party out of power insists that gaining seats is essential.₁₈

But Congress moves slowly by design. A change in Washington can translate into a policy shift over time, but new legislation still has to move through committees, floor votes, and often a conference process before it gets any consideration.₁₈

This distance between election results and any real-world impact on markets can be wider than the headlines imply.

World Markets

The MSCI EAFE Index rose 0.29 percent over the third quarter, finishing three percentage points ahead of the Dow Industrials but trailing the Nasdaq Composite and S&P 500 Index._19,20

European markets were mixed over the quarter. France was hardest hit, falling just more than 5 percent. Germany (+0.81 percent) and the United Kingdom (+1.04 percent) posted gains.₂₀

Larger emerging markets in other regions were mixed. India lost just over 5 percent for the quarter, while Brazil picked up more than 8 percent.₂₀

Pacific Rim markets were mixed, too. Japan (-4.72 percent) was under pressure for the three months, but China’s Hang Seng index (+7.57 percent) showed some good momentum. Korea (-19.33 percent) lost its groove in Q3 but is up 62 percent year-to-date.₂₀

Yahoo Finance September 30, 2026

Indicators

Gross Domestic Product (GDP)

The economy grew at a 2.2 percent annual rate in the second quarter, an upward revision from the Commerce Department’s last estimate of 1.5 percent. Key consumer spending and investment areas were revised higher and remained primary drivers of Q2 growth.₂₁

Employment

Employers added 162,000 jobs in August, triple the 53,000 job gain economists expected and the largest gain in five months. Restaurants and education led hiring, accounting for over 100,000 of the jobs added. August’s job gain far exceeded July’s 21,000 job gain (revised up from a 23,000 job loss) and June’s 31,000 job gain (revised up from a gain of 20,000). The unemployment rate was unchanged at 4.1 percent, slightly down from June’s 4.2 percent rate.₂₂

Retail Sales

Consumer spending rose 1.2 percent in August over the prior month to its highest level in five months, rebounding from July’s 0.5 percent decrease and beating expectations for a 0.8 percent increase. An August rebound was somewhat expected, given lower July sales due to large retailers shifting promotions from July to June. Year-over-year retail sales increased 6 percent, up from July’s 5 percent gain._23,24

Industrial Production

Industrial output was flat in August over the prior month, the lowest reading in five months and missing expectations for a 0.3 percent increase. That compares with a 0.2 percent gain in July and a 0.3 percent gain in June. Year over year, industrial production rose 1.4 percent, up from July’s 1.1 percent gain._25,26

Housing

Housing starts unexpectedly fell 2.6 percent in August over the prior month to 1.275 million units, the second straight monthly decline. Economists expected starts to increase 4.9 percent to 1.3 million. Weak homebuilder sentiment, mortgage rates, and decreasing affordability took their toll on demand. Regionally, starts fell steeply in the Northeast (-44.5 percent), with milder declines in the Midwest (-12 percent) and in the South (-1.3 percent). But in the West, starts rose 32.4 percent. Year over year, starts fell 1.2 percent._27,28

Sales of existing homes fell 2 percent in August over the prior month to 3.98 million units. Much like housing starts, mortgage rates, still-high home prices, and economic uncertainty continued to put off would-be buyers. Regionally, sales fell across the Northeast (-4 percent), the Midwest (-3.1 percent), and the South (-1.6 percent), while sales were essentially flat in the West. The median existing home sales price rose 1.6 percent to $429,100 from a year earlier. The inventory of unsold homes increased 3.2 percent in August over the prior month to 1.62 million units, equal to 4.9 months of supply at the current sales rate._29,30

Sales of newly constructed, single-family homes rose 6.4 percent in August over the prior month to 684,000 homes. Regionally, month-over-month sales rose 6.9 percent in the South, nearly doubled in the Midwest, declined slightly in the Northeast, and fell 15.2 percent in the West. The median new home price edged up 0.4 percent to $393,700 in August. Inventory was equal to 8.5 months of supply.₃₁

Consumer Price Index (CPI)

Inflation rose 0.4 percent in August over the prior month, as expected, after July’s 0.1 percent rise and June’s 0.4 percent decline. Core CPI, which excludes energy and food, rose 0.3 percent in August over the prior month, faster than economists expected and up from 0.2 percent in July. Year-over-year CPI held steady at 3.4 percent, as expected, matching July’s 3.4 percent increase.₃₂

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer were unchanged in August over the prior month. A drop in orders of civilian aircraft and autos dragged the transportation sector down 0.6 percent. Excluding transportation, durable goods orders rose 0.3 percent.₃₃

The Federal Reserve

The Federal Open Market Committee (FOMC) voted unanimously to raise short-term interest rates at its September meeting, increasing the Fed Funds rate by a quarter percentage point to a target range of 3.75 percent to 4 percent. It was the first rate increase in three years.₃₄

In his post-meeting press conference, Fed Chair Kevin Warsh said that “inflation is too high and has been for too long.” He added that despite expanding economic activity, “uncertainty remains elevated, owing in part to geopolitical developments,” and that the Fed’s decision supports a “timelier return” to its goal of 2 percent inflation._34,35

The FOMC meets twice more before the year’s end: October 27-28 and December 8-9.

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