October 2026 Market & Economic Update

The S&P 500 finished slightly lower in both September and October, but different parts of the market led each month. In September, the Nasdaq rose while small-cap and large-cap value stocks struggled. In October, large-cap value stocks and bonds improved as the Nasdaq fell.

In this two-month Capital Market Review, we look at what those shifts tell us about market concentration and whether economic growth is spreading beyond the industries benefiting most from investment in artificial intelligence.

Watch the full update above or on YouTube here.

Economic growth improved, while other indicators were mixed

Data center construction was one area of strength we highlighted in the review. We’re watching whether that strength spreads to other industries. The Leading Economic Index, which tracks indicators that tend to shift ahead of the broader economy, was flat in September and October after declining in August. Regional manufacturing reports pointed in different directions, and employment reports varied from month to month.

Inflation remains a concern. In the consumer and producer price readings we reviewed, we saw signs of renewed price pressure. We’re also watching credit card delinquencies for what they can tell us about household finances. The next delinquency report was still pending when we recorded this update.

The largest stocks continue to shape the S&P 500

The S&P 500 gives more weight to stocks with larger market values. At the end of October, the ten largest stocks accounted for about 39% of the index by weight in the data we reviewed.

That concentration helps explain how the index can reach a high while many of its individual stocks are still well below theirs. We’re watching whether October’s gains in areas such as large-cap value extend to more parts of the market.

We also reviewed two ways to put stock prices in historical context. The Buffett indicator compares the value of the stock market with the size of the economy. The Shiller price-to-earnings ratio compares stock prices with a longer history of earnings. Both measures eased from recent levels and remained elevated in the historical comparisons we discussed. The dot-com era offers a point of reference for how valuations and concentration have looked in the past.

Bonds recovered some ground in October

Rising interest rates in September put pressure on the bond benchmarks and dividend-paying stocks we reviewed. Bonds improved in October, although the broad U.S. bond benchmark was still down for the year through October. For balanced portfolios, the two months illustrate how the stock and bond portions can contribute differently as market conditions change.

In our next update, we’ll take a closer look at market activity following the election. If you have questions about how these developments relate to your financial plan, please contact your Kaydan Wealth Management advisor. If you’re new to our firm, call 810-593-1624 to start a conversation.

This commentary reflects our views as of the recording date and is for informational purposes only. It is not individualized investment advice. Indexes are unmanaged and cannot be invested in directly. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results.