OVERVIEW
Markets rebounded sharply last week, breaking a recent losing streak as gains spread across nearly every major index. The S&P 500 climbed 1.70%, while the Dow Jones Industrial Average rose 1.56%. The NASDAQ led large caps higher with a 2.14% advance, as the Russell 3000 also gained 1.73%. Growth stocks (+1.53%) and value stocks (+1.74%) moved largely in step, with both categories posting solid weekly gains.
Smaller companies outperformed, with the S&P 600 (small cap) surging 2.98%, while mid-caps (S&P 400) rose 1.96% and large caps (S&P 100) added 1.88%. Overseas markets were mixed—developed international equities (EAFE) advanced 0.67%, but emerging markets slipped 0.30%.
Bond markets extended their steady run. Long-term Treasuries gained 0.66%, intermediate-term issues rose 0.36%, and short-term Treasuries edged up 0.07%. Investment-grade and municipal bonds each added 0.53%, while high-yield bonds rose 0.47%. Inflation-protected securities (TIPS) ticked up 0.15%.
Commodities showed notable divergence. Gold surged 5.32%, continuing its dominant year-to-date performance near +60%. Oil, on the other hand, fell 2.03%, while corn gained 2.30% and broad commodities rose 1.47%. Real estate rebounded strongly, climbing 3.45%, and MLPs advanced 1.80%.
The U.S. dollar weakened slightly, down 0.50%, while volatility retreated sharply as the VIX fell 4.06%, reversing a portion of its prior spike.
KEY CONSIDERATIONS
Opposites Attract – The stock market is funny sometimes. It’s full of contradictions and opposing messages. That’s just the way investing works.
Take this earnings season, for example. As the chart below shows, roughly 88% of U.S. companies that have reported 3rd quarter earnings so far have beaten analyst expectations. That’s well above the long-term average of about 72%. The year-over-year measure (bottom clip) shows a gain of nearly 13%, a sign that profits are much healthier than they were last fall.
Of course, it’s still early. Only about 6% of companies have reported—so the message here could change. But still, this chart shows that earnings momentum is going to be key to a continued rally in U.S stocks.
So based on past expectations, stocks are looking good. But what about the future? That’s where things get murkier. This next chart shows Bloomberg’s Citigroup Earnings Revision Index, which tracks whether analysts are raising or cutting their future profit forecasts.
As you can see, it has clearly weakened and has actually turned negative recently. It’s kind of like analysts are now saying, “Yes, results have been great… but we’re not ready to raise the bar again.”
This contradictory message sometimes describes late-cycle dynamics. Companies squeeze out better-than-expected numbers thanks to cost controls and conservative guidance, but analysts start to tone down the outlook. Investors, meanwhile, have to balance the good news of the present with the uncertainty of tomorrow.
So far, the market seems to be siding with the optimists—and that’s OK. But if analyst revisions continue to soften, it could set up a more challenging environment heading into 2026.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.
The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S. companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. The Russell 3000 Index is a capitalization-weighted stock market index that seeks to be a benchmark of the entire U.S. stock market. The S&P MidCap 400 is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. S&P 600 Index measures the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable. The S&P 100 index is a capitalization-weighted index based on 100 highly capitalized stocks for which options are listed on the CBOE (Chicago Board of Exchange). The MSCI EAFE Index is an equity index which captures large and mid cap representation across 21 Developed Markets countries* around the world, excluding the US and Canada.
The Bloomberg U.S. Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. The Bloomberg U.S. Corporate High Yield Index is comprised of domestic and corporate bonds rated Ba and below with a minimum outstanding amount of $150 million. The Bloomberg U.S. Municipal Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds.