October 12, 2026

“We are intensely focused on not letting our emotions and fears overcome our logic and reasoning. “

 Robert Rodriguez

US equities finished higher for the week, with the S&P 500 and Dow posting solid gains after Tuesday’s record close, even as an AI-related scare mid-week kept the Nasdaq more muted.

Here are the numbers, the S&P500 finished up 1.15%, the Dow Jones Industrial Average gained .93%, the Nasdaq gained .64% Internationally, the FTSE 100 managed a gain of .86% and the MSCI-EAFE was off about .53%. the 2-Year treasury paid 4.80% and the 10-Year yield was 5.24%

So, what happened?
The week opened with momentum. On Monday the S&P 500 rose 0.66% and the Nasdaq hit a record. Tuesday brought another record for the S&P 500 at 7,818.93 its first close above 7,800 and first record since mid-August while the Nasdaq also set a new high. Then Thursday delivered the scare: a Financial Times report that OpenAI’s revenue was running roughly $20 billion below earlier figures sent chip stocks lower by about 3.4%. The Nasdaq dropped 1.25% that day. Friday recovered most of the ground, with the S&P finishing the week at 7,811.54, up 1.15% and just 0.09% shy of Tuesday’s record. The Dow closed at 51,654.95, up 0.93% for its best weekly gain since August. The Nasdaq settled at 27,366.17, up 0.64%. Small caps lagged; the Russell 2000 fell about 0.9%. Energy, utilities and consumer staples led the sector gains, each up more than 3.5%, while information technology was roughly flat after the mid-week dip. Year-to-date the S&P 500 is up about 14.1%, the Dow roughly 7.5%, and the Nasdaq about 17.7%. Oil stayed elevated WTI around $91–92 and Brent near $104 amid ongoing Middle East tensions, though President Trump’s comments that the U.S. would not attack Iran before next month’s elections helped ease some of the premium late in the week.

Overseas,
Global equities were mixed. The FTSE 100 rose 0.86% to 10,552.05, its best weekly gain since late July, helped by a Friday rally as oil and gilt yields eased. Europe finished Friday higher across the board the DAX up 1.13%, CAC up about 1% but most major indices still posted weekly declines. In Asia, Japan’s Nikkei managed a modest weekly gain while Hong Kong’s Hang Seng also advanced. We continue to see selective opportunities overseas, particularly where valuations remain more attractive relative to the U.S. and earnings growth is holding up.

What’s the FED up to?
The federal funds target range remains 3.75%–4.00% following the unanimous 25-basis-point hike at the September meeting — the first increase in three years. Minutes released Wednesday from that meeting showed most officials expect another rate increase by year-end, though they provided no clear signal on timing. The next FOMC meeting is October 27–28. Markets continue to price in the possibility of another move, especially with the 10-year yield holding above 5% and inflation expectations still elevated. Chair Warsh has emphasized data dependence and the need to deliver price stability. A cooler inflation print next week could shift the odds, but for now the bias remains toward tighter policy.

In Economic news,
Friday’s preliminary University of Michigan consumer sentiment index for October fell to 46.3 from 48.1 in September, below the 47.6 consensus and the lowest reading since May. The current economic conditions gauge sank to an all-time low of 44.7. Year ahead inflation expectations ticked up to 4.7% from 4.6%, and long-run expectations rose to 3.5%. Buying conditions for durables deteriorated sharply amid high prices and borrowing costs. Lower-income households and those with smaller stock portfolios saw particularly steep declines. Earlier in the week the September jobs report (released October 2) had been solid, but the sentiment reading underscores that the consumer is feeling the cumulative effects of higher rates, elevated oil prices, and persistent inflation. September CPI is due Wednesday that will be the next major test.

In the housing market and mortgage rates news.
Mortgage rates continued their climb. Freddie Mac’s Primary Mortgage Market Survey for the week ending October 8 showed the average 30-year fixed rate at 7.40%, up 12 basis points from 7.28% the prior week and the highest since November 2023. The 15-year fixed rose to 6.73% from 6.60%. A year ago, the 30-year was around 6.30%. That is a meaningful affordability hit. Mortgage applications have been soft as rates have moved higher. Existing home sales for September are scheduled for release this week. Overall, housing remains rate-sensitive: sales have been soft and inventory is slowly building, but demand still responds when rates ease. They did the opposite again this week.

So, in summary,
With the backdrop of the current market and the interest rate environment we will be doing some fine tuning this week, locking in some higher interest rates and looking at some  long term (5 year) trend positions that were appropriate. Overall, with the Administration doing everything possible to provide relief of gas and oil prices in a sincere effort to reduce the inflation numbers. Everything else, returning manufacturing, closing the border to relieve both cheap foreign labor and its effect on housing, social services etc., seem to be finally hitting the economy and the markets and should carry this market the balance of the year.

Mike