Taking Stock: Executive Summary September 30, 2026

Following a blockbuster Q2, the third quarter ended with markets mixed. We began the quarter with a fragile peace sending oil prices falling …but that was not to last. Stocks hit record highs mid-quarter following hopeful U.S./Iran negotiation; however, rising oil prices fueled inflation, spurring tightening monetary policy and testing the resiliency we have enjoyed these past several quarters.  

Previously we noted the uncertainty facing the U.S. economy and markets in the second half of the year. That uncertainty was heightened during the third quarter. Overall, the U.S. economy remains remarkably strong. Gross Domestic Product, boosted by corporate spending, is above what is commonly considered “normal.” The labor market remains stable. And earnings just hit the third consecutive quarter of greater than 25% growth. But headwinds persist and the future is anything but certain. Earlier in the year we anticipated the Federal Reserve would lower interest rates; however, driven by rebounding oil prices and stubborn inflation, the federal funds rate was raised by 0.25% in September, the first hike since 2023. As the Fed continues the delicate balancing act between growth and inflation, we expect that, barring a meaningful improvement in the Middle East, this may not be the last hike of the year. Chairman, Kevin Warsh, said the Fed has “no tolerance for persistently elevated inflation.” All said, we believe that continued solid economic and corporate fundamentals can offset pressure from oil and interest rates, and we expect moderate growth to continue through year-end. 

Q3 Economic Data:

Gross Domestic Product (GDP). The GDPNow model estimate for real GDP growth in Q3 2026 is 3.7% (seasonally adjusted annual rate; October 1, 2026), up from 2.2% in Q2. (A growth rate between 2% and 3% is commonly considered “normal.”)  

Unemployment. The U.S. employment market remains stable, with total nonfarm unemployment increasing +29,000 in September and the unemployment rate at 4.2%. The rate has remained in a range of 4.1% to 4.3% since March. 

Consumer Confidence. The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, fell to 81.9 in September, down from 91.2 in June.  The index remains below the baseline of 100, as oil and gas prices rose to new heights.    

Consumer Price Index (CPI). The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, increased 0.4% in August on a seasonally adjusted basis. Over the past 12 months, the all-items index increased 3.4% before seasonal adjustments.

Earnings. For Q3 2026, the estimated (year-over-year) earnings growth rate for the S&P 500 is 29.5%. If this is the actual growth for the quarter, it will mark the 3rd straight quarter of earnings growth above 25% for the index.   

Housing.  Private housing starts in August 2026 were at a seasonally adjusted rate of 1,275,000 (August 2026 rate: 1,291,000). Builders’ confidence remains below average at 35 in August, unchanged from June as builders continue to struggle with high construction costs and above average economic uncertainty. 

Looking Ahead:

As markets enter the final quarter of 2026 (historically the best of the year’s four quarters, with the S&P rising 34 of 41 fourth quarters since 1995), we expect corporate earnings to continue to support equities; however, energy prices will likely continue to drive inflation and in turn, limit the Fed’s options regarding monetary policy. How the interaction of continued growth, energy prices, inflation and monetary policy plays out, will be central to Q4 results and determining if resiliency can continue through the balance of the year. Again, we stay the course, seeking to mitigate downside risk by concentrating on fundamentals and investing in quality companies in a diversified portfolio. 

Wishing you joy and laughter as we enter the holiday season. 

Time in the market beats timing the market – Peter Lynch

We are committed to providing you with the highest standard of care in keeping with our corporate mission of 

Building Relationships … Enhancing Lives.

 Executive Summary Sources:

https://www.cnbc.com/2026/08/03/stock-market-today-live-updates.html?msockid=0a2ba074c2bb648d2fdbb747c3cc6502 

https://www.msn.com/en-us/news/other/federal-reserve-raises-interest-rates-for-the-first-time-since-2023/ar-AA2cmADN?ocid=BingNewsVerp 

https://www.wsj.com/economy/central-banking/warsh-tells-congress-the-fed-has-no-tolerance-for-high-inflation-50c5dfa8 

https://www.atlantafed.org/research-and-data/data/gdpnow/current-and-past-gdpnow-commentaries

https://www.bea.gov/news/2026/gdp-third-estimate-industries-corporate-profits-state-gdp-and-state-personal-income-2nd 

https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.conference-board.org/topics/consumer-confidence/

https://www.bls.gov/news.release/pdf/cpi.pdf

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_100226.pdf

https://www.census.gov/construction/nrc/pdf/newresconst.pdf

https://www.nahb.org/news-and-economics/press-releases/2026/08/affordability-pressures-keep-builder-confidence-low 

https://www.msn.com/en-us/news/other/the-stock-markets-best-quarter-of-the-year-is-about-to-start-the-s-p-500-has-risen-in-34-of-the-last-41/ar-AA2cCNl8?ocid=BingNewsVerp 

https://www.morningstar.com/indexes/dji/!dji/performance

https://www.morningstar.com/indexes/xnas/@cco/performance

https://www.morningstar.com/indexes/spi/spx/performance

https://finance.yahoo.com/quote/%5EDJI/history?p=%5EDJI

https://finance.yahoo.com/quote/%5EIXIC/history?p=%5EIXIC

https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC

Past performance is not indicative of future results.

The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.