October 2026 Market Commentary
MSB Wealth - Nov 04, 2026
October took investors from record highs to a technology-led reversal. Questions around AI valuations, interest rates and rising energy prices drove volatility, highlighting a divide between U.S. technology stocks and Canada’s resource-heavy market.
October offered investors a full market cycle in miniature. Early optimism carried the S&P 500 to a record close on October 6, only for the month to finish with a sharp technology-led reversal. The S&P 500 declined 1.2% for the month and the NASDAQ Composite fell 5.2%, its weakest month since March 2025. The S&P/TSX Composite moved the other way, gaining 1.1% as higher energy prices provided support to a market with greater exposure to resources and fewer mega-cap technology names.
The month’s central debate shifted from whether artificial intelligence will matter to how much investors should pay for it, and how quickly today’s extraordinary spending will translate into tomorrow’s earnings. Late-month results from several large
technology companies revived concerns about the scale and financing of AI investment, turning what had been a narrow source of market leadership into an equally narrow source of volatility. October’s final session made the point with unusual efficiency: the S&P 500 fell 1.8% and the NASDAQ dropped 2.9%, while technology was the weakest major U.S. sector.
Interest rates remained in focus, but the emphasis shifted from September. The U.S. Federal Reserve left its policy rate unchanged at 3.75% to 4.00% on October 28, while the 10-year Treasury yield eased to 4.94% by month-end. In Canada, the Bank of Canada raised its policy rate by 0.25 percentage points to 2.50% on October 28, against a backdrop of stronger-than-expected growth and persistent energy-driven inflation. Meanwhile, WTI crude climbed above US$104 per barrel as geopolitical supply concerns intensified. The result was a market balancing lower long-term yields against higher energy costs and a stricter standard for growth-stock valuations. October did not end the AI story, but it did remind investors that even transformative themes eventually receive a visit from the valuation department.
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