Weekly Market Movers | October 26, 2026

Today on Weekly Market Movers:

• More Stocks Moved Higher: The major indexes fell, but roughly two-thirds of stocks gained as the weakness was concentrated in large tech and AI companies.
• AI Is Getting Very Expensive to Build: Meta’s spending highlighted the enormous cost of the AI buildout and raised questions about how companies will pay for it and earn that money back. 
• Housing Is Feeling the Pinch: High mortgage rates, construction costs, and affordability continued to weigh on home sales, new construction, and builder confidence.
• $100+ Oil Is Hitting More Than Energy: Rising oil prices are feeding into transportation costs, household budgets, inflation, and potentially interest-rate decisions.
• Treasuries Helped When Tech Sold Off: Government bonds gained as technology stocks fell, showing they can still provide some balance when markets get shaky.
• This Week Packs a Lot In: The Fed meets Wednesday, followed by GDP and inflation data, plus earnings from Alphabet, Microsoft, Amazon, Intel, and companies across several other industries.

Transcript

Morning, and welcome to Wealth Enhancement’s weekly Market Movers video series.

My name is Doug Huber, and I’m the Deputy Chief Investment Officer.

I hope everyone’s week is off to a great start, and I really look forward to getting into what drove market price action last week and then what we’re going to be watching in the markets and the economy this week.

I feel like a little bit of a broken record, having done this last week. I feel like I’m saying a lot of the same things, but we saw it yet again. Last week really was an interesting and unusual combination, right? We had major tech indices declining, while at the same time most individual stocks outside of tech were actually up.

You had Treasury yields fall, at the same time oil moved higher, and so we’ll get into what drove a couple of those big moves. Headline numbers: the S&P 500 lost about half a percent last week, and the NASDAQ declined about 0.7%. The Dow, however, gained about four-tenths, and small caps were up roughly 2% for the week. So I think that contrast matters.

What we saw was not a broad flight from equities. Roughly two-thirds of stocks last week advanced. The weakness was really concentrated in those very large tech- and AI-related companies, and because their index weights are so large, it makes that headline market move look worse than what the average stock actually did. One of the clearest examples was Meta.

A big name, its shares fell roughly 9% last week after capital spending exceeded operating cash flow and free cash flow actually turned negative. And while revenue growth remained really strong, investors were much more focused on how they’re financing their growth, the power and infrastructure that’s going to be necessary and required to support that growth. Even as of this morning, you saw Meta actually come out and say they’re going to raise $95,000,000,000 in equity to continue to push this. It’s remarkable how much capital expenditure it requires to really build this AI boom out.

And so it’s going to be interesting to see how the market continues to look through that.

I think the broader lesson is that AI demand can remain very strong, but the market’s becoming more selective. Revenue growth, capital intensity, depreciation, how companies are financing it, and free cash flow conversion are now all being evaluated together. It’s going to be important as these companies report. The market is going to become much more selective in looking through whether this spend is actually delivering something for me, the shareholder.

The economic data was mixed last week but not necessarily recessionary by any stretch. U.S. business activity strengthened in October.

The Flash Composite Purchasing Managers Index rose to 57.6%, and weekly unemployment claims remained low under 200,000, at 194,000. I think the weak spot was definitely housing. Housing has been weak. Starts declined more than 5% as pending home sales fell about 7.3%, and builder confidence is extremely low at 29.

I think it’s a function of all the things we know and feel. High mortgage rates, construction costs, and affordability are clearly the constraints that continue to strangle that market.

Alongside that, it’s not surprising that consumer sentiment is also a bit depressed, as near-term inflation expectations remain very elevated. Households continue to spend, but confidence in purchasing power is now under pressure from those higher prices as the consumer continues to feel more strain on their pocketbooks.

Oil, as always, is a very important cross-asset-class driver. Brent gained more than 6% and finished above 116 per barrel as tensions involving Iran and Gulf shipping states intensified.

West Texas Intermediate, which is kind of the U.S. measure, gained less because of contract and regional differences but still closed above 103. It’s at the point, and I think everybody can probably feel this, where oil is affecting more than just energy company earnings. It’s influencing gasoline, the freight to move all the products we use, food distribution, inflation expectations, and even central bank policy. While it can be supportive of energy shares, it’s simultaneously very much the weighing constraint on consumers and rate-sensitive assets.

The longer that oil and commodity prices stay higher, the increased drag the economy is going to have to pull itself through.

Despite the increase in oil, Treasuries actually rallied last week. The two-year finished near 4.68%, the 10-year actually dropped below 5% to 4.99%, and the 30-year was hovering around 5.32% to close the week.

It was very interesting to see that on Thursday the 10-year yield actually fell almost 20 basis points as investors really had that flight to safety amid the tech volatility and the French fiscal stress and what’s going on over there. So it is good to see that Treasuries continue to act as a shock absorber. They do continue to provide ballast when there’s equity market volatility.

On the other side, credit spreads widened, but very marginally. There really is no generalized funding seizure in credit markets. They remain quite open. Investment-grade and high-yield risk premiums rose very modestly, but on the other side you have muni bonds actually gaining for the week as fund flows remain quite positive.

I think this upcoming week is going to be quite consequential because we have a convergence of monetary policy, economic data coming out, and a bunch of mega-cap earnings all converging.

First, we’ll see the Federal Reserve announce its decision on Wednesday. A hold is widely expected after September’s rate increase. I think the larger question is whether Chair Kevin Worsch is going to signal that there’s another increase likely in December. So I think his press conference and the verbiage of the meeting will be very much looked at to see if there are any signals as to what’s coming down the pipe.

Thursday brings third-quarter GDP and the Fed’s preferred inflation measure. I think growth forecasts are actually quite wide here. They’re very unusually wide, which is a reason to really focus on the report’s composition rather than just the single headline estimate. So we will be paying attention to that. We’ll come back with what that readout looks like next week.

On the inflation side, economists are generally expecting annual PCE inflation around 3.6% to 3.7%, with core inflation near 3.1%.

Strong growth with moderating inflation would be the most constructive combination. Hot inflation, especially alongside weak growth, would be more difficult on both stocks and bonds, so that’s something to watch.

On the equity side, corporate results are equally important this week. We’re going to have Alphabet and Microsoft report on Wednesday, followed by Amazon and Intel on Thursday.

Investors are certainly going to be comparing cloud and AI revenue growth with capital spending, depreciation, the availability of power, and the impact on free cash flow. On the other side, you’re going to see Boeing, Visa, Caterpillar, Eli Lilly, Chevron, and Exxon all providing a much broader view of industrial demand, consumer activity, healthcare, and energy.

So, a lot going on this week. We’ll have a lot to talk about next week.

The only other thing I think will be important to watch this week is some of what’s going on abroad. This morning you had Brazil’s election results, where Lula maintained the presidency.

The market had actually priced in his opponent, Bolsonaro, winning that. Stocks were up materially over the prior few weeks or even months.

Unfortunately, it went the other way, and so I think you’re seeing a bit of that selling off. I think Brazil’s stocks were down 20% at one point this morning. It’s a local repricing. I don’t think it should be extrapolated into a global conclusion here, but it’s certainly something to watch and consider what effects that will have more broadly.

I think the balanced takeaway is that market breadth improved last week, which was great.

Credit conditions remain functional.

And even as large tech companies and oil created volatility, the overall economic picture remains pretty strong.

We don’t report any of this to cause knee-jerk reactions to move portfolios. We just want to be informative as to what moves them. We certainly believe that it’s about time in the markets, not timing the markets, and it’s important to stay invested and be balanced. This is a good time that diversification is working, which is great.

And so with that, we’ll have a lot to report on coming up next week. We look forward to talking with you then, but thank you for tuning in.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor’s specific circumstances. Investing involves risk, including possible loss of principal.

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