Market Commentary
for the week ending 10/23/2026

This past week the stock market had a lot of ups-and-downs, with plenty of rotation amongst the various sectors. It was a volatile week characterized by sharp shifts in market leadership each day, however it ended with relatively modest weekly changes in the major averages, obscuring much larger moves among individual groups. At the end of the week both the S&P 500 Index and the Nasdaq composite were down slightly, while the Dow Jones Industrial Average and Russell 2000 Index (small-caps) both rose slightly.

The equity landscape experienced a pronounced divergence as a sharp rotation out of some of the high-flying artificial intelligence and semiconductor stocks continued on some days last week, most especially on Thursday. The Semiconductor Index dropped 6% on Thursday, expanding its total October retreat to 13%. This decline has been driven in part by concerns about the reliance on debt to finance the massive AI infrastructure buildout. While this dragged down the Nasdaq somewhat, assets seemed to shift into value and defensive sectors. Utility, consumer staples, and healthcare companies were the primary gainers, allowing the Dow Jones and the Russell 2000 to finish the week higher. The rotation offered an encouraging indication that buying interest remains intact despite the recent volatility in technology stocks.

Last week included some important earnings developments as SpaceX reported strong results and upbeat guidance driven by Starlink and AI computing. The company reinforced expectations for continued investment in its AI computing infrastructure, helping revive buying interest in a group that had struggled in recent weeks.

However, Netflix declined after a slightly disappointing fourth-quarter guidance and a noteworthy reduction in its full-year advertising revenue outlook overshadowed its earnings beat. The more cautious takeaways focused on weak US engagement and the content slate. However, the more positive commentary revolved around healthy core subscription business, strong retention, pricing power, and international growth.

A disappointing reaction to the Meta Platforms quarterly earnings report also weighed down markets. The social media giant reported stronger-than-expected revenue and underlying earnings, supported by continued advertising growth, but investors focused instead on the mounting costs of its AI investments. Quarterly capital expenditures exceeded operating cash flow, while underlying operating margins contracted from a year ago.

Tesla also declined following its earnings report. Although the company exceeded adjusted earnings expectations and reported improving automotive margins, it also mentioned declining operating income and a reduction in its fiscal-year capital expenditure outlook that raised questions about the pace of investment in its autonomous driving and robotics initiatives.

The consumer staples sector benefited from a positive earnings reaction in Procter & Gamble. This company beat expectation, showed an encouraging acceleration in organic sales growth, and reiterated guidance in-line with the market’s expectations.

With another batch of earnings reports due this week, investors will have additional opportunities to assess whether the outlook for AI-related growth can justify the market’s elevated expectations.

Last week also provided some rather disappointing housing data. October homebuilder sentiment declined to its lowest level since June 2012. NAHB economists said elevated mortgage rates, high construction costs, and softer consumer confidence are keeping prospective buyers sidelined. September home sales fell 7.3% month-over-month, the steepest monthly drop in nearly a year. September housing starts also disappointed and marked its third straight monthly decline.

WTI crude oil prices rose amid heightened geopolitical concerns surrounding potential additional U.S. and Israeli strikes against Iran. The higher oil prices added another source of uncertainty for investors. Last week Trump said that he is not negotiating with Iran and threatened that “something” will happen fairly soon. Attacks on ships in the Strait of Hormuz have reached a record high. Meanwhile, the regional conflict continues to broaden, with Egypt saying it is prepared to support Saudi Arabia against Iran-backed Houthi attacks, following Turkey and Pakistan committing support earlier this month. Houthis continued launching multiple strikes on Saudi energy, airport and military targets. The U.S. offered Russian President Putin a trilateral summit between President Trump, Putin, and Zelenskyy in an effort to secure a ceasefire. Renewed talks are expected to begin next month. However, on Friday Russia and Ukraine traded fresh strikes despite the hopes for peace talks.

Looking ahead to this week, the third-quarter earnings season will accelerate with results from Microsoft, Google, Amazon, Visa, Verizon and many more. On top of that, this week will also include the highly anticipated FOMC meeting in which the Federal Reserve is expected to hold interest rates steady this time.

For the week, the Dow rose +0.4% to 52,215, the S&P 500 dipped -0.5% to 7,624, while the Nasdaq Composite declined -0.7% to 25,955.

Crude oil rose +1.8% to $103.17/barrel, gold declined -4.2% to $4,007/oz. and the yield on the Ten-Year Treasury bond dipped back below 5% for the first time in a month to end at 4.99%.

 

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