Market Commentary October 5, 2026

October 5, 2026

The Markets

Traveling a bumpy road.

Early in the third quarter, markets moved ahead enthusiastically. However, the road got rougher later in the quarter as investors pondered inflation, oil prices, interest rates, and other economic concerns. Here’s a brief recap:

AI-related stocks drove stock markets higher

For the last three years, artificial intelligence (AI)-related stocks have helped propel markets to new heights. That continued during the third quarter, reported Sarah Hansen of Morningstar, although momentum slowed as “a growing chorus of AI executives and researchers sounded the alarm on safety concerns for the rapidly advancing technology.”

Companies in many other sectors performed less well over the quarter. “Market breadth has narrowed once again, with two tech-heavy sectors, alongside energy, pacing overall gains for the past month. Everything else, including summer stalwarts such as healthcare, financials, and consumer staples, having been trading in the red,” reported Martin Baccardax of Barron’s in late September.

The bond market shifted gears

Yields on U.S. Treasuries rose to the highest levels in decades, reflecting persistent inflation, rising government debt levels, and a surge of corporate debt issued to support the buildout of AI. Jack Denton of Barron’s reported:

“The benchmark 10-year U.S. Treasury yield rose at the fastest pace this century in the third quarter, with much of the advance coming in late August and through September. The note’s yield popped from around the 4.6 percent mark to above 5.3 percent, the highest level in 24 years, sitting at 5.23 percent on Friday… Corporate bond yields have also followed benchmark Treasury yields higher.”

The Federal Reserve lifted rates

In September, the Federal Open Market Committee (FOMC), which is the Federal Reserve’s rate-setting committee, lifted the federal funds rate to cool inflation. After the meeting, Fed Chair Warsh stated:

“Our decision comes at a time when the American economy appears to be strengthening. New hiring, private-sector earnings, business capital investment—each of these markers has improved in recent months and is pointing in a good direction…Consider the geopolitical landscape of shocks and uncertainty, and you begin to appreciate the resilience of the U.S. economy… Yet, for more than five years, inflation has been running above target. The plain fact is that inflation is too high and has been for too long.”

Last Monday, the probability of another rate increase in October was above 70 percent according to the CME FedWatch tool. Then September’s better-than-expected inflation report and a worse-than-expected jobs report caused expectations to change dramatically. The chance that the FOMC will hold rates steady rose significantly.

The change gave markets a boost early on Friday, reported Connor Smith of Barron’s. For the week, though, only the Nasdaq Composite Index showed a gain. Yields on the longest maturities of Treasuries rose over the week.

Data as of 10/2/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor’s 500 Index	-0.3%	12.8%	15.0%	21.7%	12.4%	13.6%
Vanguard Total Intl Index (Foreign Stocks)	-1.1	13.9	18.0	20.7	9.3	9.2
Total Bond Market (U.S. Dollar Bonds)	-0.6	-2.7	-2.2	4.3	-0.7	1.1
S&P GSCI Gold Index	-3.7	-4.1	7.6	31.1	18.7	12.2
Bloomberg Commodity Index	-2.0	29.0	35.0	10.9	6.8	5.2

S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

ACHIEVEMENTS SO SURPRISING THEY MAKE PEOPLE LAUGH, THEN THINK. The Ig Nobel Prizes were organized by the magazine, The Annals of Improbable Research, and recognize funny and thought-provoking scientific research. The 36th First Annual Ig Nobel Prize ceremony took place in Zurich, Switzerland, where the honorees received their awards from actual Nobel Prize recipients. (Only one scientist has ever won both an Ig Nobel and a Nobel prize.) This year’s Igs included the:

Physics Prize rewarded an investigation into fluid dynamics that led to the development of a splash free urinal. “Splash-free Urinals for Global Sustainability and Accessibility: Design Through Physics and Differential Equations” was published in PNAS Nexus.
Technology Prize was awarded to a study that broke new ground exploring whether mosquito proboscises could effectively be used as high-resolution printing nozzles. “3D Necroprinting: Leveraging Biotic Material as the Nozzle for 3D Printing” was published in Science Advances.
Peace Prize recognized researchers who discovered that people value friends who behave viciously toward people they don’t like. “Sometimes We Want Vicious Friends: People Have Nuanced Preferences for How They Want Their Friends to Behave Toward Them Versus Others” was published in Evolution and Human Behavior.
Chemistry Prize rewarded research that determined a single crystal of cockroach milk protein contains more than three times the energy of an equivalent mass of cow milk protein. “Structure of a Heterogeneous, Glycosylated, Lipid-Bound, in Vivo-Grown Protein Crystal at Atomic Resolution from the Viviparous Cockroach Diploptera Punctata” was published in the International Union of Crystallography Journal.
Biology Prize went to innovators who “gently stepping on various parts of various venomous snakes — repeatedly, at various temperatures at various times of day — to try to learn what does and what does not induce a venomous snake to bite a human.” “Study of Defensive Behavior of a Venomous Snake as a New Approach to Understand Snakebite” was published in Scientific Reports and later retracted on concerns about the treatment of the snakes. The researchers confirmed they had been gentle with the snakes.

“All winners received a statuette (this year, a slab of blue cheese topped by a foot erupting with toadstools in honor of this year’s broader theme of “fungi”) and 10 trillion Zimbabwean dollars. But that currency cratered years ago, so it isn’t actually worth anything,” reported Ari Daniel of All Things Considered.

WEEKLY FOCUS – THINK ABOUT IT

“Logic will get you from A to B. Imagination will take you everywhere.”

— Albert Einstein, Physicist

Best regards,

Waterford Advisors

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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.

* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.

* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.

* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.

* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

* Asset allocation does not ensure a profit or protect against a loss.

* Consult your financial professional before making any investment decision.

Sources:

https://www.morningstar.com/markets/7-charts-q3-market-highlights-stocks-tread-water-while-bond-market-shudders

https://www.barrons.com/articles/ai-stock-rally-narrow-market-breadth-warning-5766c3cb or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/10-05-26-Barrons-AI-Stocks-Cant-Carry%20-%202.pdf

https://www.barrons.com/articles/ai-bond-yield-treasuries-stock-market-7e0e6d45 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/10-05-26-Barrons-AI-is-Helping-And-Hurting%20-%203.pdf

https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260916.pdf

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html [historical and current] or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/10-05-26-FedWatchTool%20-5.pdf

https://finance.yahoo.com/economy/policy/article/pce-inflation-eases-to-34–cooling-the-case-for-another-fed-rate-hike-125513195.html

https://www.barrons.com/livecoverage/jobs-report-september-data-today?mod=hp_LEDE_C_3 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/10-05-26-Barrons-The-Numbers%20-%207.pdf

https://www.barrons.com/livecoverage/stock-market-news-today-100226?mod=hp_LEDE_C_2 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/10-05-26-Barrons-Bond-Yields-Are-Back%20-%208.pdf

https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/10-05-26-Barrons-DJIA-S&P-Nasdaq%20-%209.pdf