The Market Lens
October reminded investors that markets rarely move in a straight line. Renewed tension with Iran pushed oil back above $100 a barrel, the 10-year Treasury yield touched 5.34% mid-month before easing back below 5%, and AI-related stocks took a breather. Even so, the S&P 500 has held near 7,600, and the economic data have been sturdier than the mood.
First Trust’s Brian Wesbury points out that the economy grew at a 3.4% annual rate in the third quarter, but he is quick to add that the strength is concentrated: “AI and data centers are booming, the rest of the economy is not.” Housing remains soft. The Federal Reserve held rates steady at 3.75% to 4.00% on October 28, and Wesbury expects one more quarter-point hike in December, but fewer increases after that than markets currently anticipate. He also believes inflation should ease next spring, provided oil prices do not spike again.
Corporate earnings remain the market’s strongest support. According to Zacks, S&P 500 companies reporting early in the third-quarter season grew earnings more than 36% from a year ago, and more than 80% beat analysts’ estimates. Fourth-quarter estimates are rising, with 15 of 16 sectors projected to grow. Zacks does note that a handful of names carry much of the load: excluding Nvidia, Micron and Alphabet, technology-sector earnings growth drops from roughly 42% to about 19%. Zacks favors earnings-backed opportunities in semiconductors, energy and utilities.
LPL Research views stock valuations as fair in context: at roughly 18.7 times expected earnings, the S&P 500 trades below its five-year average because profits have outpaced prices. LPL sees energy prices as the key inflation risk to watch.
Beyond the Balance Sheet
Voters head to the polls on Tuesday, November 3, and history suggests the outcome matters less to portfolios than many expect. LPL Research notes that midterm years have historically been the weakest of the four-year presidential cycle, with the largest average pullbacks. Once uncertainty lifts, however, the S&P 500 has risen in each of the 18 twelve-month periods following a midterm election since 1954.
With narrow margins expected in both chambers regardless of outcome, LPL anticipates continued gridlock, which markets have largely priced in. LPL sees executive actions, regulation and trade policy as more likely sources of volatility than new legislation, and a December government funding deadline during the lame-duck session is worth watching. The Fed, which tends to avoid acting right before a national election, meets again December 8–9. Zacks adds that staying invested has historically beaten moving to cash over political preferences.
With two months left in the year, now is the time to finalize year-end planning: required minimum distributions, charitable gifts, tax-loss harvesting, Roth conversion opportunities and retirement plan contributions. Business owners should also confirm 2026 retirement plan funding and any plan design changes before December 31.
Elections come and go, but your plan is built for the long run. If you’d like to talk through how the results or year-end deadlines affect you, please reach out.
Phil, Nick, and Wendy | Legacy Wealth Planning | 775-850-2500 | www.lwpreno.com
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