September 2026 Market Commentary

September lived up to its reputation for being a difficult houseguest: it arrived with higher bond yields, stayed longer than investors would have preferred, and helped itself to a little market momentum on the way out. The S&P 500 slipped 0.5% during the month, while the S&P/TSX Composite declined 2.9%. The NASDAQ Composite was the exception, advancing 1.9% as investors continued to reward a narrower group of technology and growth companies with visible earnings and cash-flow support.

The central issue was not that economic growth disappeared, but that it remained firm enough to keep inflation and interest-rate expectations uncomfortably alive. The U.S. 10-year Treasury yield finished near 5.30%, forcing investors to reconsider the price they were willing to pay for future earnings. Canadian equities faced an additional headwind from weaker energy-sector performance late in the month, even as oil and refined-product prices remained elevated and volatile. In short, September was less about recession fear and more about the market adjusting to the reality that capital may remain expensive for longer.

That distinction matters. Higher yields can compress valuations, but they do not automatically end an equity cycle, particularly when they reflect resilient activity rather than a breakdown in credit conditions. September’s pullback was a reminder that markets rarely move in a straight line and that strong long-term outcomes are usually built through periods that feel considerably less comfortable in real time.

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