Happy Friday everyone. We’re now only a week out from Halloween so make sure you buy the good candy while you can. No one wants to be the Almond Joy house.
Let’s walk through the week that was.
📊 Weekly Market Recap
- S&P 500 return Year-to-date were approximately 15.47%
- S&P 500 3 month return were approximately 6.31%
- S&P 500 return over the past month were approximately 2.23%
- S&P 500 return over the past 7 days were approximately 1.91%
This Week in the Markets- 3 Things to know
- Swing and a Miss– This week’s earnings spotlight fell on two major names, Netflix and Tesla and both delivered results that left investors wanting more. Netflix reported subscriber growth below expectations despite strong original content releases, hinting that global saturation might finally be setting in. Revenue came in lighter than projected, and while ad-tier adoption continues to rise, the company’s average revenue per user declined slightly, raising concerns about profitability. Tesla, on the other hand, posted another drop in margins as price cuts and competition continued to bite. Even with strong delivery numbers, total revenue missed the mark, and free cash flow slipped compared to last year. Elon Musk’s comments about “navigating a challenging demand environment” didn’t inspire much confidence either. Both stocks fell after hours, reflecting investors’ frustration with limited guidance for the next quarter.
2. Consumers Still Spending, But Getting Cautious– Despite all the talk about a cooling economy, consumer spending is holding up better than expected. Retail sales rose again this past month, led by strong demand for travel, entertainment, and personal goods. It’s a sign that Americans are still willing to spend, even with prices higher than pre-pandemic levels. But the tone is changing confidence surveys show that people are feeling more uncertain about the future, especially as savings dwindle and credit card balances grow. Households are starting to shift from big-ticket purchases to smaller indulgences, and that’s visible in company reports from Target to Starbucks. The labor market is still giving consumers a cushion, but wage growth is slowing, and higher rents are eating into disposable income. Economists say this mix points to “late-cycle” behavior and people are adjusting, not collapsing. For now, consumer resilience is keeping the economy afloat, but it’s built on shaky ground. Another soft jobs report or inflation surprise could quickly change the story.
3. Corporate Confidence Returns– Amid all the noise about inflation, rate cuts, and market volatility, corporate America is quietly doubling down on investment. Companies across nearly every sector are ramping up spending on automation, AI infrastructure, and supply chain upgrades. Factory construction is booming, data centers are expanding, and leaders are treating this period not as a slowdown but as a strategic reset. Executives appear focused on retooling rather than retreating, betting that smart investment now will pay off when growth rebounds. This surge in spending has quietly become a stabilizing force for the economy, helping offset weaker consumer demand and housing activity. It also signals a deeper belief that innovation will define the next cycle.
Cooling Inflation, Rising Hopes
As the end of the year approaches, the U.S. economy stands at a pivotal moment, can it finally slow inflation without stalling growth? The latest CPI report showed inflation rising at a 3.0% annual rate, slightly below forecasts and signaling that price pressures are finally gradually easing signaling another rate cut. Core inflation rose just 0.2% in September, the slowest pace in months, which sent markets soaring this morning into new all time highs as traders bet on continued rate cuts from the Federal Reserve. With borrowing costs already easing and early signs of revived business investment, optimism has begun to return. Consumer spending, while moderating from its post-pandemic highs, remains a stabilizing force supported by steady wage gains and a labor market that, though cooler, remains resilient. If inflation continues to drift lower and confidence in both households and corporations rebuilds, 2026 could usher in a period of modest but sustainable expansion something the U.S. hasn’t achieved in nearly half a decade.
Still, the balance is fragile. Inflation remains sticky in key categories like housing, healthcare, and insurance, keeping the Fed cautious. At the same time, cracks in the labor market rising jobless claims, slower hiring, and wage fatigue suggest the economy could be losing momentum. Global uncertainty only adds to the tension: next week’s meeting between President Trump and China’s President Xi Jinping could either ease trade frictions or reignite them. A renewed truce could stabilize supply chains and strengthen markets (especially the semi conductor sector), while new tariffs could drive costs higher, potentially pulling the economy toward a stagflationary mix of slower growth and rising prices. In that environment, every policy move carries heightened risk, and the tightrope between progress and peril narrows further.
The Federal Reserve’s next steps will define how 2026 unfolds. Should growth cool too quickly, the Fed may introduce additional rate cuts to support lending and investment, but cutting too aggressively risks reigniting inflation. Conversely, if inflation flares again due to renewed trade tension or supply shocks the Fed may be forced to pause or reverse course, which could strain the labor market. Beyond rates, the central bank stands ready to use liquidity tools to calm financial stress if needed. Ultimately, the coming year will test the Fed’s agility and America’s economic resilience. The best-case scenario is a soft landing: inflation near 2%, growth around 2%, and confidence restored. But a misstep whether in policy, trade, or geopolitics could shift the economy back into turbulence just as stability seemed within reach.
S&P 500 SECTOR SNAPSHOT- Past Week
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