What you need to know
After three quarters, the S&P 500 was up +11.84%, but it’s been sideways for the past two months. Strong corporate earnings held stocks aloft despite rising interest rates and oil prices. Earnings estimates for Q3 are +29.5% year-over-year.
The Federal Reserve raised short-term interest rates by 0.25% (from 3.50% to 3.75%) in September after having kept it flat for the last three years. The Fed increased rates to slow inflation as oil prices surged again. Long-term interest rates responded even more aggressively to the oil spike.
We are taking action to tax-loss harvest where appropriate in taxable accounts and rebalancing managed portfolios in tax-deferred accounts.
Interest Rates
As of September 30, 2026
| Rate | Yield |
|---|---|
| 3-Month Treasury | 3.86% |
| 1-Year Treasury | 4.38% |
| 5-Year Treasury | 4.97% |
| 10-Year Treasury | 5.08% |
| 30-Year Treasury | 5.38% |
| 30-Year Fixed Mortgage Index | 7.58% |
| 15-Year Fixed Mortgage | 6.70% |
| National Average HELOC ($30K) | 6.81% |
Earnings Growth drives stock prices and this is where we focus our attention. On the chart below you will see the earnings growth estimates for Q3 as of June 30 compared with today. Expectations for the energy sector were extremely high at 79.3% but today the growth is at 114% year-over-year (Y/Y). Only Consumer Disc., Financials, and Consumer Staples are less than 5% Y/Y.
Public Markets – Key takeaways going into year end
The US stock market moved higher following the Federal Reserve’s September 17 rate hike. This seems counterintuitive as higher rates are a headwind to stocks. But the primary trend remains bullish, supported by solid economic health and robust corporate earnings.
Key Market Drivers
Broader Growth: S&P 500 earnings growth is tracking above 20% for 2026, with strength expanding beyond tech into banking, energy, manufacturing, and materials.
The AI Boom: Tech giants are committing over $1 trillion in capital spending for next year, creating real efficiency gains and profit expansion across the index.
Economic Support: Inflation continues to cool while the job market stays resilient. Valuations generally remain mildly attractive, at 7.7% below fair market value.
Private Market Performance
Real Estate: The Green Street Commercial Property Price Index for all property types climbed 4.1% over the 12 months ending June 30, 2026, yet overall values remained roughly 14% below their 2022 peak. Modest price gains were driven by sector-specific fundamentals and sticky cap rates. The chart below illustrates the recovery is in process and we are still well below the pre-covid high.
Private Equity: The primary PE fund we use from Stepstone (with 75% private equity, 20% real assets and 5% private debt) was +5.50% YTD ending 8/31 and +9.55% over the last year.1
Private Credit: Private lending fund redemptions slowed in Q3 as default rates remained quite low. Private credit funds will benefit from rising yields if the U.S. economy remains in expansion. The private credit funds we use are strongly outperforming taxable bonds with total returns ranging from +1.5% to +5.72% ytd as of 8/31.2
Venture Capital Update (for Qualified Clients): The VC update will be distributed as soon as updates are received from the portfolio companies. You may view all the portfolio companies here: Regatta VC
Client Advisory
We encourage you to inform us of any changes in your situation that may necessitate updates to your account objectives. Thank you for entrusting us with your financial needs.
The “Read More” Section
For those with an insatiable appetite for learning about the financial markets, this is one of the better whitepapers we have read recently.
What investors want in retirement – The Capital Group →Notes and Disclosures
1 See full fund performance details here: https://go.stepstonegroup.com/rs/664-QRQ-541/images/SPRIM_US_Fact_Card.pdf
2 See full fund performance details here: https://www.bcred.com/wp-content/uploads/sites/66/blackstone-secure/BCRED-Fact-Card.pdf?v=1790774306
Performance Disclosure: Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Past performance does not predict future results. Index and benchmark returns are included for reference only and do not include third-party investment advisory fees.
Consumer Price Index (CPI): Measures the average change over time in the prices paid by urban consumers for a fixed basket of goods and services. It reflects out-of-pocket spending.
Federal Reserve (Fed): The central bank of the United States, responsible for monetary policy.
Gross Domestic Product (GDP): Measures the total economic output in goods and services for an economy.
Personal Consumption Expenditures (PCE): Measures the average change in prices of goods and services consumed by individuals in the United States, including spending on behalf of households by non-profit institutions and government programs. The Federal Reserve prefers PCE for setting monetary policy.
Producer Price Index (PPI): Measures the average change over time in the selling prices received by domestic producers for their goods and services.
S&P 500® Index: A market-capitalization-weighted index of the 500 largest US publicly traded companies, widely regarded as the best gauge of large-cap US equities.
U.S. Consumer Confidence Index: A survey by The Conference Board of how optimistic or pessimistic consumers are about their expected financial situation over the next six months.
Treasury Yield: The effective annual interest rate the US government pays to borrow money through Treasury bonds, notes and bills.
VIX: The CBOE Volatility Index, which measures the market’s expectations for volatility over the next 30 days, based on prices of options on the S&P 500 index.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of the portfolio team and are no guarantee of the future performance of any fund. This information is for educational purposes only and is not intended as investment advice. References to specific securities are for illustrative purposes only and are not recommendations to buy or sell. Opinions and estimates constitute our judgment and, along with other portfolio data, are subject to change without notice.
