I hope you’re doing well and enjoying the start of fall. We’re pleased to share a summary update from our partner, Stratos Investment Management, on what happened during the third quarter and what we’re watching as we head into the final months of 2026. For those interested in more detail, we’ve included a link to the full commentary below.
Interest rates were a major focus during the quarter. The Federal Reserve raised the Fed Funds rate by 0.25%, while longer-term Treasury yields moved higher amid ongoing inflation and fiscal concerns. Higher rates can create challenges for both stocks and bonds, making the direction of interest rates an important factor to watch in the months ahead.
Stocks produced mixed results during the quarter. The S&P 500 held up relatively well, supported by strong earnings growth among some of the index’s largest companies. Smaller and mid-sized companies faced more pressure as rates increased, while market performance continued to be concentrated among the largest companies in the S&P 500.
Bonds also faced some challenges as yields increased, particularly in longer-term fixed income. Shorter-term bonds were less affected, highlighting the different ways that changes in interest rates can impact various areas of the bond market.
The economy continues to show signs of resilience, with second-quarter economic growth coming in slightly stronger than previously estimated and the labor market remaining relatively tight. At the same time, inflation remains above the Federal Reserve’s 2% target, which could keep interest rates higher for longer than previously anticipated.
Looking ahead, Stratos remains constructive on equities through the end of the year but continues to closely monitor inflation, interest rates, corporate earnings, and valuations. With rates potentially remaining elevated, market performance could continue to vary considerably across different asset classes and areas of the equity market.
As always, periods of changing market conditions reinforce the importance of maintaining a diversified portfolio, reviewing allocations regularly, and staying focused on long-term objectives rather than short-term market movements.
Thank you for taking a moment to read this update. As always, I’m here if you’d like to discuss your portfolio or the outlook in more detail.
