Episode 106 | Q3 2026 Market Review: Stocks, Bonds, and the Fed

Rodney Lake (0:01)

Thank you for joining Market News with Rodney Lake. This is a regular program for the GW Investment Institute, where we talk about timely market topics. I'm Rodney Lake, the Director of the GW Investment Institute. Let's get started.

Welcome back to Market News with Rodney Lake. I'm your host, Rodney Lake. Today's episode, we're gonna go over the market overall Q3 to date. So where are we now? Remember, this is the GW Investment Institute podcast. We're coming to you from Washington, DC., right here at the heart of Foggy Bottom, the George Washington University School of Business, Dukes Hall, Dukes Family Studio. Again, GW Investment Institute podcast, informational only here. All right, so let's get started with where we're going. All right, we said, okay, this is gonna be a little bit different. We're not gonna go over a company today. We're gonna go talk about some companies, but we're gonna talk about where the market is overall. So Q3, 2026, data check here and where we are. So we're just in the early part of October when we're recording this. So we're gonna be principally talking about Q3 calendar, that September 30, 2026 dates here or data as of that date. So let's start with where we are in the stock market. So if you look at what's happening overall, so what has some of these year to date numbers been for the major indexes? So if you look at just a couple here, so we'll take the Dow, the Nasdaq, the Russell 2000, the S&P, which is the major market index, and the Nasdaq 100 So if you look at year to date, where we are now, and this is gonna be broad basis as of October, so not exact Q3 numbers here, but just where we are. But this will be representative. And so the S&P 500, you're up over 13%. And so, many people, you think about the year and you think, well, it's been up, it's been down. But the year to date numbers are remarkably good at this point. So we're through three quarters of the year, the S&P 500 is up over 13%. That's quite good, and especially historically. So if you think the long term average is somewhere between 8 and 10%, depending on where you start the setup here, going back 100 years, obviously you're over the average for what would be the total return here for the year. And then if you look at some of the other indexes, the Dow has been the laggard, so you're talking around just under 7% for the Dow. But then if you look at the Nasdaq, 22% plus here for the year to date numbers here in October. And so if you look at the Russell, also have done well, about 14%. Now it did have some pressure in September, but still doing quite well. And so across all these major indexes on the equity side, things have been working. Now, that has been a very different experience in the bond market. The bond market has actually been down, obviously when they work inversely, returns and prices and rates. And so if you look at what's happening, the interest rate is going up, that means price is coming down. And so the returns for the bonds have actually been coming down. So if your bond yield is coming down over time and you're holding those bonds, you're going to be making money and the opposite is true, which has been the case. So if you're holding a bond and the rates are going up, you're losing money on the market to market basis. So bonds have been more challenged year to date. And if you look at the 10 year, we're at all time highs. And so it has been a different experience for people that are bond holders. And so quite good if you look at everything. And so just running through the indexes here again. So we'll add a couple more. So if you look at the MSCI emerging markets, 23%, the Nasdaq, as I mentioned, 16, the Russell 2, 13, the S&P, nearly 13, the Russell 3000 at 12, the MSCI, IFA at 10, and the Dow, as I mentioned, 7 So really the laggard in that whole setup is the Dow, followed by the Russell 2 But the Russell 2 is in the teens, the Russell 3, rather, is almost 13 It's in the 12s, and so double digits. The only single digit there is the Dow. Now, if we look at the bond side, if you look at the year to date on the corporate high yield, you're talking plus 0.1 percent, and then in the aggregate, minus nearly three, and then the municipal, very challenged, minus just over 4 percent. Again, these are very different experiences in the equity market versus the bond market and where rates have been. Obviously, inflation has been a big part of that story and concerns around inflation and what's the Fed going to do, what are the markets going to do. If you look at the 30-year fixed here, that's over 7 now, and so that's a big challenge for borrowers. And if you talk about home borrowing, home borrowers and first-time home buyers, obviously, that can be a big blocker for the first-time home buyers. Now, the good news is that there's inventory out there for new bills, which is very different than just the standard turnover because they're motivated sellers, they build these houses and they need to move on. And so some of those companies are buying down rates, for example. And so, again, the experience is different. And so if you look at the 10-year here, going back to rates, they hit over 5%, which is a high, a 10-year high, the highest since 2022 and about 0.85 basis points up in the Q3.