The Markets (as of market close October 30, 2026)
The major indexes finished the week lower, with tech and AI shares bearing the brunt of the sell-off. The small caps of the Russell 2000 closed the week higher. Among the market sectors, only communication services and information technology closed the week lower. Energy and health care outperformed. As stock traders moved from risk, Treasury yields fell on rising demand for government bonds. Crude oil prices moved little during the week and remained firmly above $100.00 per barrel.
Last Week’s Economic News
- By a 10-2 vote, the Federal Open Market Committee decided to maintain the federal funds rate at 3.75% to 4.00%. The Committee noted that economic activity was expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth was strong, and capital investment was robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remained elevated.
- Gross domestic product (GDP) rose 3.4% in the third quarter, impacted by a surge in AI investment and consumer spending, which was inflated by higher prices. Primary categorical contributors to the increase in third-quarter GDP were accelerations in private investment and government spending. A surge in imports (19.7%), which are a negative in the calculation of GDP, coupled with a drop in exports (-5.7%), tempered economic growth in the third quarter. Consumer spending increased 3.8% in the third quarter, the same advance as in the prior quarter.
- Personal income increased in September, according to estimates released by the Bureau of Economic Analysis. Disposable personal income (personal income less personal current taxes) increased, and personal consumption expenditures (a measure of consumer spending) increased after rising in August. Consumer prices rose in September and 3.6% over the last 12 months. Core prices (less food and energy) increased in September and 3.1% for the year.
- Sales of new single-family houses in September were slightly below the August 2026 rate and 5.3% under the September 2025 estimate. Inventory of new single-family homes for sale in September represented a supply of 8.4 months at the current sales pace, marginally below the August estimate of 8.5 months but above the September 2025 estimate of 8.2 months. The median sales price of new houses sold in September was $400,400. This was 3.9% above the August price of $385,400 but 3.9% below the September 2025 price of $416,800.
- New orders for manufactured durable goods in September, up six of the last seven months, increased $6.3 billion, or 1.8%, to $345.4 billion. This followed a 0.1% August increase. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders increased 2.2%. Transportation equipment, up two of the last three months, led the overall increase, advancing $5.2 billion, or 4.6%, to $119.8 billion.
- The international trade deficit was $134.9 billion in September, up $2.8 billion, or 2.1%, from August. Exports of goods for September were $209.2 billion, $5.3 billion, or 2.6%, more than August exports. Imports of goods for September were $344.1 billion, $8.1 billion, or 2.4%, more than August imports.
- For the week ended October 24, there were 194,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level. The advance number of those receiving unemployment insurance benefits during the week ended October 17 was 1,701,000, a decrease of 21,000 from the previous week’s level.
- The national average retail price for regular gasoline was below the prior week’s price but higher than a year ago.
Eye on the Week Ahead
The jobs report for October is out this week. Payroll advances have slowed considerably over the past several months, and expectations are that job gains in October will be moderate at best.
Have a nice week!
Sincerely,
Robert G. Carpenter