U.S. and Canadian Markets

Markets finished October mixed, with tech stocks under steady pressure as the month progressed.

The Standard & Poor’s 500 Index slipped 0.93 percent, while the Nasdaq Composite fell 5.30 percent. By contrast, the Dow Jones Industrial Average rose 1.70 percent. The S&P/TSX Composite gained 1.09 percent.1,2

I have no special talents. I am only passionately curious.

Albert Einstein, a theoretical physicist and the 1921 Nobel Prize recipient for his explanation of the photoelectric effect within the field of physics.

A Choppy Start

Stocks staged an uneven advance early in the month as economic, geopolitical, and artificial intelligence-related events competed for investors’ attention.3,4

But jitters crept back into market sentiment midweek after Treasury yields hit fresh multidecade highs and tech pulled down much of the broader market.5,6

Midmonth Stumble

As the month progressed, markets trended lower as several events unsettled investors. Corporate earnings results were mostly positive, but high investor expectations stymied market momentum. Then a warm consumer inflation report further dampened enthusiasm.7

Mixed Q3 Results

As the month came to a close, stocks rose in anticipation of strong third-quarter corporate reports, especially from big tech companies and AI-related names. But mixed results left investors disappointed, and money appeared to rotate out of big tech names on lingering AI concerns. The Nasdaq had its worst month in more than a year.8,9

U.S. Sectors

Nine of the 11 S&P 500 Index sectors advanced in October. The two sectors with the heaviest concentration of AI companies fared the worst.10

Energy (+13.9 percent) led for the fourth consecutive month, as that sector continued to benefit from elevated oil prices. Consumer Staples (+10.9 percent), Utilities (+10.1 percent), and Health Care (+9.8 percent) also logged double-digit or near-double-digit gains. Materials (+8.3 percent), Consumer Discretionary (+6.0 percent), Financials (+5.8 percent), and Real Estate (+5.5 percent) all posted very solid returns. Industrials (+0.3 percent) advanced slightly.10

Information Technology (-8.3 percent) and Communication Services (-10.0 percent) were under steady pressure amid investor concerns about AI.10

Canada Recap

The S&P/TSX Composite Index rose modestly in October, paced by gains in metals, financials, and technology.

The index opened strong, climbing nearly 1.2 percent. The index then took a breather due to higher bond yields and falling gold prices.11,12

Despite the road bump, the first half of October delivered solid gains overall.13,14

The Bank of Canada raised its policy rate on October 28, citing persistent inflation. A global tech selloff spread into Canadian tech and materials shares, trimming gains as the month closed out.15,16

What Investors May Be Talking About in November

In the month ahead, two competing forces may take turns sharing headlines: inflation updates and what’s next for artificial intelligence.

The Fed is concerned that inflation is broadening out as it watches costs ripple through the economy.17

But the Fed also anticipates an AI tailwind as companies focus on execution, rolling out enterprise workflows that could change how businesses operate, help them manage costs, and potentially boost productivity.17

World Markets

The MSCI EAFE Index declined 0.8 percent in October.18,19

European markets were mixed. The United Kingdom (+1.17 percent) and Germany (+2.46 percent) had a strong month. France was flat, while Italy (-3.64 percent) and Spain (-3.98 percent) were under pressure.19

Markets outside of Europe were similarly mixed. Mexico (+8.70 percent) and India (+2.73 percent) rose over the month, while Egypt (-4.48 percent) and Brazil (-9.88 percent) lost ground.19

Pacific Rim markets were mostly lower. Australia (+1.35 percent) was the standout. China’s Hang Seng lost 5.36 percent while Japan fell 4.24 percent. The volatile Korean market lost 16.19 percent, trimming its year-to-date gain to 36 percent.19

Indicators

Gross Domestic Product (GDP)

The economy grew 3.4 percent annualized in the third quarter according to the Bureau of Economic Analysis's initial estimate, beating economists’ expectations of 3.1 percent growth. It also marked an acceleration from Q2, when GDP grew at a 2.2 percent annualized rate.20

Employment

Employers added 29,000 jobs in September, short of the 84,000 economists expected. In August, 133,000 jobs were added. The unemployment rate rose to 4.2 percent in September, only slightly higher than August’s 4.1 percent rate. Year-over-year hourly wages grew 3 percent, missing expectations for a 3.1 percent wage gain and marking the slowest increase in several years.21

Retail Sales

Consumer spending rose 0.8 percent in September, slowing from an upwardly revised 1.3 percent increase in August but more than doubling economists’ expectations for a 0.3 percent rise. Year-over-year retail sales increased 6.3 percent, up from a 5.6 percent gain in August.22,23

Industrial Production

Industrial output rose 0.7 percent in September over the prior month, beating expectations for a 0.4 percent increase. Year over year, industrial production rose 2.2 percent, up from August’s upwardly revised 1.6 percent gain.24,25

Housing

Housing starts fell 5.2 percent in September, missing economists’ projections for a 2 percent increase. Single-family starts fell 4.6 percent to 859,000, the lowest level in a year, while multifamily starts fell 7.2 percent. Regionally, starts fell in the West (-23.2 percent) and Midwest (-19.0 percent), were flat in the Northeast, and rose in the South (+6.1 percent). Year over year, starts fell 7.4 percent.26,27

Sales of existing homes unexpectedly rose 1.5 percent in September over the prior month to 3.99 million units, the first monthly increase since May and an about-face from August’s 2 percent decline; economists were expecting a 0.8 percent decline. Homebuyers took advantage of flatter mortgage rates over the summer before rates began rising again recently. Year over year, existing home sales fell 2.2 percent. Regionally, sales fell in the Northeast (-2.1 percent), flattened out in the Midwest, but rose in the South (+2.8 percent) and in the West (+2.8 percent). The median existing home sales price rose 1.3 percent from a year earlier to $417,500. The inventory of unsold homes increased 1.9 percent in September over the prior month to 1.6 million units, 4.6 percent higher than 12 months prior and the highest level in 7 years.28,29

Sales of newly constructed, single-family homes dipped 0.6 percent in September over the prior month and 5.3 percent over the prior 12 months to 676,000 homes. The median new home price increased 3.9 percent in September to $400,400, but fell 3.9 percent compared to September 2025’s median price of $416,800.30,31

Consumer Price Index (CPI)

Inflation rose 0.6 percent in September over the prior month, slightly above expectations. Core CPI, which excludes energy and food, rose 0.3 percent in September over the prior month, faster than the 0.2 percent economists expected and matching the 0.3 percent rise in August. Year over year, CPI rose 3.7 percent, higher than the 3.6 percent economists expected and up from August’s 3.4 percent gain.32,33

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer rose 1.8 percent in September over the prior month, accelerating from an upwardly revised 0.1 percent increase in August. Aircraft bookings increased more than 11-fold, pushing transportation sector orders higher by 4.6 percent and driving much of the overall increase. Excluding transportation, durable goods orders rose 0.5 percent month over month. Year over year, total orders rose 9.9 percent.34

The Federal Reserve

The Federal Open Market Committee (FOMC) voted as expected to hold short-term interest rates steady at its October 28 meeting, maintaining the current Fed Funds rate target range of 3¾ to 4 percent.35

In his post-meeting press conference, Fed Chair Kevin Warsh suggested last month’s quarter-point rate increase was already starting to have its intended effect, with tighter credit conditions moving the economy toward a “longer, more durable period of economic growth and price stability.”35

The FOMC’s next scheduled meeting of 2026 is December 8–9.

By the Numbers: Giving Season