October closed with one of the busiest weeks of the year, and the message from markets was mixed. The S&P 500 fell 0.6% for the week and the Nasdaq Composite lost 2.0%, while the Dow Jones Industrial Average slipped 0.9%, ending a three-week winning streak. Friday did most of the damage: the S&P 500 fell 1.8%, its worst day since June, and the Nasdaq dropped 2.9%. For the month, the Dow gained 1.7% while the S&P 500 lost 0.9% and the Nasdaq fell 5.3%, its weakest month since March 2025.
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The Federal Open Market Committee (FOMC) held the federal funds rate at 3.75%-4.00% in a 10-2 vote. Two officials dissented in favor of a quarter-point hike, and the statement described growth as strong and inflation as elevated.
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Chair Kevin Warsh announced that, starting in 2027, one of the Fed’s eight annual meetings will focus on strategy rather than a rate decision, with two such meetings planned for 2028.
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The economy grew at a 3.4% annual rate in the third quarter, according to the advance estimate of Gross Domestic Product (GDP), up from 2.2% in the second quarter.
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Inflation moved in the wrong direction for the Fed. The Personal Consumption Expenditures (PCE) Price Index rose 3.6% over the year ending in September, and core PCE, which excludes food and energy, rose 3.1%.
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Wage pressure looked contained. The Employment Cost Index (ECI) rose 0.8% in the third quarter and 3.4% over 12 months.
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Several large technology companies reported results showing heavy spending on artificial intelligence (AI) infrastructure, and investors questioned the payoff. Alphabet had its worst day on record Thursday, and Intel fell roughly 29% Friday after a weak outlook.
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Bonds rallied as stocks fell. The 10-year Treasury yield ended the week at 4.94%, down from 5.00% a week earlier.
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Brent crude’s expiring December contract settled at $117.64 a barrel Friday, its highest settlement since late April, as conflict in the Middle East continued.
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The December 8-9 FOMC meeting. After this week’s decision, futures markets priced roughly an 82% to 85% chance of a December hike, according to CME FedWatch data reported October 28-29.
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The October jobs report on November 6 and the October Consumer Price Index (CPI) on November 10.
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The November 3 midterm elections.
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Whether investors continue to reward heavy AI investment, or start to demand clearer evidence of returns.
This week showed two stories running side by side: a strong economy that keeps inflation and interest rates elevated, and a stock market growing more selective about what it will pay for future growth. Neither story tends to resolve in a single week. We believe investors are generally better served by a plan that accounts for both, with diversification across asset classes and a clear understanding of how much short-term volatility a portfolio is designed to absorb.
Weekly Market Commentary: October 26 – 30, 2026
A Divided Fed Holds, the Economy Runs Hot, and Tech Pays the Price for AI Spending
October closed with one of the busiest weeks of the year, and the message from markets was mixed. The S&P 500 fell 0.6% for the week and the Nasdaq Composite lost 2.0%, while the Dow Jones Industrial Average slipped 0.9%, ending a three-week winning streak. Friday did most of the damage: the S&P 500 fell 1.8%, its worst day since June, and the Nasdaq dropped 2.9%. For the month, the Dow gained 1.7% while the S&P 500 lost 0.9% and the Nasdaq fell 5.3%, its weakest month since March 2025.
What We Observed This Week
The Federal Open Market Committee (FOMC) held the federal funds rate at 3.75%-4.00% in a 10-2 vote. Two officials dissented in favor of a quarter-point hike, and the statement described growth as strong and inflation as elevated.
Chair Kevin Warsh announced that, starting in 2027, one of the Fed’s eight annual meetings will focus on strategy rather than a rate decision, with two such meetings planned for 2028.
The economy grew at a 3.4% annual rate in the third quarter, according to the advance estimate of Gross Domestic Product (GDP), up from 2.2% in the second quarter.
Inflation moved in the wrong direction for the Fed. The Personal Consumption Expenditures (PCE) Price Index rose 3.6% over the year ending in September, and core PCE, which excludes food and energy, rose 3.1%.
Wage pressure looked contained. The Employment Cost Index (ECI) rose 0.8% in the third quarter and 3.4% over 12 months.
Several large technology companies reported results showing heavy spending on artificial intelligence (AI) infrastructure, and investors questioned the payoff. Alphabet had its worst day on record Thursday, and Intel fell roughly 29% Friday after a weak outlook.
Bonds rallied as stocks fell. The 10-year Treasury yield ended the week at 4.94%, down from 5.00% a week earlier.
Brent crude’s expiring December contract settled at $117.64 a barrel Friday, its highest settlement since late April, as conflict in the Middle East continued.
What We Are Watching
The December 8-9 FOMC meeting. After this week’s decision, futures markets priced roughly an 82% to 85% chance of a December hike, according to CME FedWatch data reported October 28-29.
The October jobs report on November 6 and the October Consumer Price Index (CPI) on November 10.
The November 3 midterm elections.
Whether investors continue to reward heavy AI investment, or start to demand clearer evidence of returns.
The Long-Term Takeaway
This week showed two stories running side by side: a strong economy that keeps inflation and interest rates elevated, and a stock market growing more selective about what it will pay for future growth. Neither story tends to resolve in a single week. We believe investors are generally better served by a plan that accounts for both, with diversification across asset classes and a clear understanding of how much short-term volatility a portfolio is designed to absorb.
This content is for educational purposes only and does not constitute personalized investment advice or a recommendation to buy or sell any security. The information provided reflects general market commentary based on publicly available information and is not tailored to the financial situation of any individual. Investing involves risk, including the possible loss of principal. Past market performance is not indicative of future results. Guardant Wealth Advisors, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training.
more posts:
Student of the Market: October 2026
Weekly Market Commentary: October 12 – 16, 2026
Everybody Wants to Rule the World: Who Will Own the AI Consumer?