AE Wealth Management Quarterly Market Report for Q3 2026
Oil prices whipsawed, the Fed raised interest rates for the first time this year and bond yields climbed to their highest levels in roughly two decades, yet U.S. stocks kept climbing in Q3. Stay anchored to your financial plan as midterm elections and unresolved global tensions affect markets in the final quarter of 2026.
The third quarter of 2026 tested a simple question: Can markets keep climbing a wall of worry? Investors saw a little bit of everything over the last three months. Oil prices swung up and down, the Federal Reserve reversed course and raised interest rates, and bond yields hit their highest levels in nearly 20 years. Despite all of it, the S&P 500 pushed to new highs and locked in gains for the quarter.1
Oil and Inflation Keep Investors Guessing
Oil prices fell from more than $100 per barrel at the end of the first quarter to below $70 as summer began, and for a while it looked like the standoff tied to the Iran conflict was easing.2 Inflation stayed elevated but manageable, and expectations built that it would continue to cool as oil prices fell.
But with a resolution to the Iran conflict still out of reach, oil prices moved higher through the summer and crossed back over $100 per barrel in mid-September before easing into the low $90s on renewed talks between the White House and Iran.3 The pattern has repeated for months: Hopes for a deal ease pressure on oil markets temporarily, then talks stall and prices climb again.
The Fed Reverses Course
As oil hovered between $90-$100 per barrel, elevated inflation forced the Fed’s hand. Markets had been anticipating a potential rate cut by year-end but were instead handed a rate hike of 25 basis points in mid-September.4 The Fed cited inflation that has remained stuck well above its 2% target as its reason for the hike. Higher inflation also spurred talk of another potential rate increase sometime in the fourth quarter.5
Bond Yields Hit a Multi-Decade High
The bond market felt the impact of higher-for-longer inflation most acutely. The 10-year Treasury note’s yield climbed above 5% during the quarter, its highest level in nearly 20 years, as investors lost patience with inflation running above the Fed’s 2% target.6 The nation’s debt load, which crossed $40 trillion in August, added to the unease.7
President Donald Trump’s reignited trade fight with Canada also contributed to the noise in the third quarter. It’s too early to say how significant the dispute will become, but it’s one more variable for investors to watch heading into year-end.8
Stocks Shrug Off the Noise
Given everything working against it, the stock market was surprisingly resilient in the third quarter. The S&P 500 opened the quarter at 7,483 and closed above 7,650, pushing its year-to-date gain past 12.5%.9 Along the way, sentiment swung between rising rates weighing on high-flying technology stocks and renewed rallies once concerns eased. Worries about the jobs market gave way to a rebound, and slower gross domestic product (GDP) growth didn’t translate into recession fears.10,11
Equity Performance as of Sept. 30, 202612,13,14
| Equity Index | Q3 | YTD | 1 YR | 3 YRS | 5 YRS |
| S&P 500: | 2.03% | 11.77% | 14.40% | 21.29% | 12.18% |
| NASDAQ: | 2.47% | 15.57% | 18.54% | 26.66% | 13.20% |
| DJIA: | -2.70% | 5.91% | 9.72% | 14.96% | 8.51% |
Looking Ahead
The fourth quarter brings its own wildcard in the form of midterm elections. If the past nine months have felt eventful, expect no shortage of noise as political ads and speculation dominate the airwaves in October. History offers some perspective. Research on midterm election years since 1950 has found that markets tend to be choppy from late August through early October, before a fourth quarter that has historically outperformed the rest of the year.15 Still, fundamentals — including monetary policy, economic growth and corporate earnings — are likely to matter more than the election calendar in determining where markets go from here.
Oil and the situation tied to Iran remain big headwinds for markets in the final quarter of 2026. Until there’s a resolution, it will be difficult to get lasting clarity on inflation and growth.
This is a good time to revisit your financial plan and confirm your portfolio still reflects your goals, time horizon and risk tolerance. The first three quarters of 2026 have been unpredictable, and the fourth is unlikely to be any different. Staying disciplined, diversified and in close contact with your financial advisor remains the best approach as we head into the final quarter of the year.
1 Yahoo! Finance. “S&P 500 (ˆGSPC).” https://finance.yahoo.com/quote/%5EGSPC/. Accessed Sept. 24, 2026.
2 CNBC. “WTI Crude (Nov’26).” https://www.cnbc.com/quotes/@CL.1. Accessed Sept. 24, 2026.
3 Patrick Wintour. The Guardian. Sept. 22, 2026. “Iran and US have held talks on sidelines of UN summit, says Donald Trump.” https://www.theguardian.com/world/2026/sep/22/iran-us-talks-sidelines-un-summit-trump-israel-us. Accessed Sept. 24, 2026.
4 Federal Reserve. Sept. 16, 2026. “Federal Reserve issues FOMC statement.” https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm. Accessed Sept. 24, 2026.
5 Ines Ferré. Yahoo! Finance. Sept. 20, 2026. “‘This could be something more substantial’: Wall Street braces for more Fed rate hikes.” https://finance.yahoo.com/economy/policy/article/this-could-be-something-more-substantial-wall-street-braces-for-more-fed-rate-hikes-123400710.html. Accessed Sept. 24, 2026.
6 CNBC. “U.S. 10 Year Treasury.” https://www.cnbc.com/quotes/US10Y. Accessed Sept. 24, 2026.
7 John Towfighi. CNN. Aug. 23, 2026. “The national debt just hit $40 trillion. But just how big is $40 trillion?” https://www.cnn.com/2026/08/23/economy/national-debt-40-trillion. Accessed Sept. 24, 2026.
8 Rob Gillies. AP. Sept. 8, 2026. “Trump widens trade war with Canada beyond tariffs. Here’s what to know.” https://apnews.com/article/canada-trump-carney-trade-war-tariffs-4620ffb5ecc029322217207fa6758431. Accessed Sept. 24, 2026.
9 Morningstar. “S&P 500 PR.” https://www.morningstar.com/indexes/spi/spx/quote. Accessed Oct. 1, 2026. Accessed Oct. 1, 2026.
10 U.S. Bureau of Labor Statistics. Sept. 4, 2026. “Employment Situation Summary.” https://www.bls.gov/news.release/empsit.nr0.htm. Accessed Sept. 24, 2026.
11 Bureau of Economic Analysis. Aug. 26, 2026. “GDP (Second Estimate) and Corporate Profits, 2nd Quarter 2026.” https://www.bea.gov/news/2026/gdp-second-estimate-and-corporate-profits-2nd-quarter-2026. Accessed Sept. 24, 2026.
12 Morningstar. “S&P 500 PR.” https://www.morningstar.com/indexes/spi/spx/quote. Accessed Oct. 1, 2026. Accessed Oct. 1, 2026.
13 Morningstar. “NASDAQ Composite PR USD.” https://www.morningstar.com/indexes/xnas/@cco/quote. Accessed Oct. 1, 2026.
14 Morningstar. “DJ Industrial Average PR USD.” https://www.morningstar.com/indexes/dji/!dji/quote. Accessed Sept. 24, 2026.
15 Sheryl Estrada. Fortune. Sept. 23, 2026. “In midterm years, October is usually the best month for stocks, with gains 73.7% of the time.” https://fortune.com/2026/09/23/in-midterm-years-october-usually-best-month-for-stocks-gains-78-9-of-the-time/. Accessed Sept. 24, 2026
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