Asset Management
10/26/2026 Market Strategy
October 26, 2026
History May Not Repeat Itself, But It Often Rhymes
A Quote Usually Attributed to Mark Twain Comes to Mind This Week
Key Takeaways
- The S&P 500 slid 0.5% as investors rotated and rebalanced portfolios last week. Investors favored small cap as well as defensive sector stocks; communication services stocks slid 6% on the week.
- The Q3 earnings season for the S&P 500 continued to show strong results overall. With nearly a quarter of the firms of the index having reported, earnings are up 38% from a year earlier on revenue growth of 11.8%. Prior to the start of the season, FactSet put bottom-up growth expectations at 29.6%.
- This week 178 firms are slated to report, followed by 145 more over the week of Nov. 2.
- This week brings the Conference Board’s consumer confidence survey, personal income and spending data and the first estimate of Q3 GDP growth. Bloomberg’s survey shows a 3.2% growth rate expected for Q3, up from the 2.2% reported for the June quarter.
Market participants will likely focus on the Fed’s FOMC decision on Wednesday along with Q3 earnings results as the earnings season gathers momentum with 178 S&P 500 companies reporting this week across financials, information technology, consumer discretionary, consumer staples, energy, materials, industrials, utilities, real estate, and health care.
We are not surprised to find the market’s institutional memory lacking at this juncture as we recall the gauntlet that software and hardware names were forced to walk earlier this year.
What Have You Done for Me Lately?
In our view bears, bull market skeptics, and nervous investors took advantage of any weakness perceived in results or guidance that fell short of expectations when companies reported Q3 earnings results last week.
Even as economic, corporate, and consumer based fundamentals are still remarkably resilient and are supported with watershed developments in technology, it seemed as if stocks and economic data that disappointed had to “walk the proverbial gauntlet” last week.
Both the well-established names in technology and newer, less proven names in tech continued to find AI related company spending generating increased levels of worry among market participants about the magnitude of such spending versus how long it could take for such investments to become profitable. We expect this will likely remain a source of future debate and price discovery and later rebalancing and rotational tweaking for some time as only proven profitability can counter such worry.
That said evidence of user adoption rates of AI by both businesses, the consumer, researchers, educators, and the leisure users of technology suggests to us that AI is here to stay as it morphs into greater levels of sophistication and use. Cybersecurity and future regulation will undoubtedly be needed, and we hope will likely provide necessary guardrails to protect users and counter the bad actors who can be found throughout history wherever opportunity and money tied to watershed transformations in technology surface.
For investors, it remains our view that such an environment calls for prudent diversification along with right-sized expectations to navigate volatility that comes with the opportunities and risks at hand.
From our perch on the market radar screen the recent sell off in tech (particularly semiconductors and memory stocks) looks uncannily not dissimilar to prior AI memory, software, and semiconductor repricings that have occurred this year and last year and from which tech stocks managed to recover lost ground and as a sector have been able to generate broader rallies that followed across sectors, market capitalizations, and style (growth vs. value).
We are not surprised to find the market’s institutional memory lacking at this juncture as we recall the gauntlet that software and hardware names were forced to walk earlier this year.
The Week Ahead
That said we expect some potential for volatility this week with a trove of stateside data scheduled for release including the Fed’s favorite gauge of inflation (the PCE deflator) along with a large number of widely followed companies in sectors belonging to the S&P 500 that include: information technology, communications services, healthcare, financials, materials, consumer discretionary, consumer staples, utilities and real estate.
In addition to the economic data, the Fed’s FOMC announcement of its interest rate decision arrives on Wednesday at 2pm.
So long as the Fed’s FOMC decision is taken to signal that the central bank remains diligent in showing sensitivity in managing its dual mandate to keep inflation in check while not unduly impeding jobs growth, we think their decision will be constructive for the market.
That said, we are still in the camp that expects the Fed could raise rates when it meets in December -- but only if such action would be clearly called for.
Name:
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
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