October 26, 2026

“The big money is not in the buying and the selling, but in the waiting.”

Charlie Munger

US equities finished a choppy week mixed. The Dow posted a third straight weekly gain, while the S&P 500 and Nasdaq edged lower after Thursday’s sharp tech sell-off and Friday’s pressure from rising oil. Brent crude pushed above $116, its highest since June 2022, and WTI settled near $103. The 10-year Treasury finished just under 5%. Investors are now looking ahead to a heavy earnings week and the Fed’s October 27–28 meeting.

Here are the numbers. The S&P 500 finished down 0.47% at 7,623.68. The Dow Jones Industrial Average gained 0.41% to 52,215.16. The Nasdaq lost 0.71% to 25,955.34. The Russell 2000 rose about 2% to 2,775.90. Internationally, European markets closed mostly lower Friday; the FTSE and DAX were softer on the oil move. The 2-year Treasury was near 4.7% and the 10-year finished at 4.99%.

So, what happened?

The week started quietly higher. Monday and Tuesday the S&P ground up modestly as the Nasdaq found its footing after the prior week’s AI-related damage. Wednesday was stronger still, with the Nasdaq up more than 1%. Then Thursday hit: the Nasdaq dropped 2.6% — its biggest one-day decline since June — on renewed worries about the cost of financing the AI buildout and a telecom-related headline involving SpaceX. Energy was the bright spot as oil climbed. Friday stocks opened under further pressure from the oil spike (Brent +3.1% above $116) and finished lower: S&P −0.5% to 7,623.68, Dow −1.2% to 52,215.16, Nasdaq −0.2% to 25,955.34. The Dow still managed a small weekly gain — its third in a row — while the S&P and Nasdaq booked modest weekly losses. Year-to-date the S&P 500 is up 11.4%, the Dow 8.6%, and the Nasdaq 11.7%.

Overseas,

Foreign markets felt the oil move and the tech caution. European indexes closed mostly lower Friday, with France’s CAC off about 0.4%. Asia was mixed earlier in the week but generally tracked the U.S. tech volatility. The multi-year case for foreign equities remains intact; this week they simply shared some of the oil and rate pressure the U.S. tape absorbed.

What’s the FED up to?

No meeting this week — the Committee is in the quiet period ahead of October 27–28. The funds rate is still 3.75%–4.00% after the September hike. Markets are pricing a high probability of a pause next week, though the oil spike and still-elevated inflation keep the door open for another move later. December 8–9 is the next scheduled meeting after that. A 5% 10-year is already doing some of the work; the question is whether Warsh and the Committee still feel they need to do more themselves.

In Economic news,

The data were secondary to oil and tech, but they did not contradict the “softening but not breaking” story. September housing starts fell 5.2% to a 1.221 million annual rate, well below the 1.3 million expected, with both single-family and multi-family down. Building permits were roughly flat at 1.40 million. Jobless claims remained low. The final University of Michigan sentiment reading for October stayed soft near 46, with longer-term inflation expectations around 3.5%. Flash PMIs showed the economy still expanding, but the housing print is a clear sign that 7.3% mortgages are biting.

In the housing market and mortgage rates news.

Mortgage rates finally paused. Freddie Mac’s survey for the week ending October 22 put the average 30-year fixed rate at 7.32%, down 8 basis points from 7.40% — the first decline in nine weeks. The 15-year fixed eased to 6.68% from 6.71%. A year ago the 30-year was around 6.2%. The small relief is welcome, but 7.32% is still a heavy weight; housing starts and builder sentiment both reflect that. Demand still shows up when rates ease. They just eased a little.

So, in summary,

The longer-term consensus on U.S. equities remains moderately constructive, but the near-term tape is being driven by two things: the AI financing and valuation debate, and oil. The Dow’s third straight weekly gain shows the broader market is still holding up on earnings and the economy. The Nasdaq’s Thursday drop and Friday’s oil-driven close show the risks. WTI is back above $100 and Brent is at multi-year highs. The 10-year is just under 5%. The Fed meets next week. We share the constructive multi-year view, but we are not going to pretend $100-plus oil and another AI wobble are background noise. What would make us more bullish in a hurry is a sustained pullback in oil that sticks, cooler inflation that lets the second hike fade, and evidence that AI infrastructure spending is translating into durable earnings rather than just capital raises. Until then we stay balanced and selective.

Mike