Astra Series Market Commentary | October 2026
Markets Hold Firm as Rates Rise
The third quarter ended on a surprisingly strong note. Despite sharply higher interest rates, oil prices near $100, continued geopolitical uncertainty and plenty of debate about AI valuations, the S&P 500 gained around 2% for the quarter while the Nasdaq was up about 2.5%. For the year, the S&P 500 has now risen nearly 12% and the Nasdaq is up over 15%.[i] While investors have plenty to worry about, corporate earnings and continued economic growth have continued to buoy markets.
The biggest change during September was in the bond market. The yield on the 10-year U.S. Treasury ended the month around 5.3%, its highest level since 2002.[ii] At the end of June, it was closer to 4.4%. That is a large move in only three months, but markets kept rising despite the higher interest rates.
Higher Treasury yields normally create a headwind for stocks. They increase borrowing costs throughout the economy while also affecting how investors value companies. If an investor can earn more than 5% on a U.S. Treasury bond, stocks have more competition for investment dollars. Higher rates are particularly important for companies whose valuations depend heavily on earnings expected far into the future, which is much of the technology sector, particularly AI.
Oil is impacting the economy and rates as well. Higher crude prices resulting from the conflict with Iran have increased concerns that inflation could remain elevated. Higher energy costs feed directly into inflation and indirectly into the cost of transporting and producing almost everything else. That has contributed to the rise in interest rates.
There was some encouraging news on inflation at month end. The Federal Reserve's preferred inflation measure, the PCE price index, increased 3.4% over the past year in August.[iii] While still high, the number was better than many economists had expected and reduced expectations for another immediate Fed rate increase.
The economy, meanwhile, continues to hold up surprisingly well. Second quarter economic growth was revised higher to an annualized rate of 2.2%, supported by consumer spending and business investment.[iv]
Artificial intelligence remains an important part of the positive side of this equation. Companies continue to commit enormous amounts of capital to all things AI. Data centers, semiconductors and the infrastructure, including power generation, needed to support AI are all receiving a lot of investment dollars. That investment is supporting economic activity and earnings well beyond the largest technology companies.
There are legitimate questions about how long the current pace of AI spending can continue and whether dollars invested will ultimately produce targeted returns. For now, however, capital spending remains strong and corporate profits continue to provide meaningful support to the market.
As the fourth quarter begins, inflation, Treasury yields, oil prices and corporate earnings will remain among the most important factors to watch. The market has continued to advance despite a more demanding interest rate environment, suggesting that investors remain focused on growth, earnings and the durability of the current expansion.
Daniel Wildermuth
Portfolio Manager, Quartz Astra Strategies
[i] Mikolajczak, Chuck & Chaughan, Shashwat. “S&P 500 dips, Nasdaq higher after data shows moderate inflation rise.” Reuters. 2026, September 30. https://www.reuters.com/business/us-stock-futures-inch-up-yields-ease-inflation-report-looms-2026-09-30/
[ii] Heard on the Street Staff. “10-Year Treasury Yield Rises to New 24-Year High.” Wall Street Journal. 2026, September 30. https://www.wsj.com/finance/investing/10-year-treasury-yield-rises-to-new-24-year-high-641f0790?mod=finance_lead_story
[iii] Heard on the Street Staff. “10-Year Treasury Yield Rises to New 24-Year High.” Wall Street Journal. 2026, September 30. https://www.wsj.com/finance/investing/10-year-treasury-yield-rises-to-new-24-year-high-641f0790?mod=finance_lead_story
[iv] Heard on the Street Staff. “10-Year Treasury Yield Rises to New 24-Year High.” Wall Street Journal. 2026, September 30. https://www.wsj.com/finance/investing/10-year-treasury-yield-rises-to-new-24-year-high-641f0790?mod=finance_lead_story
DATA SOURCES
Market Data: https://www.wsj.com/market-data
INDEX DESCRIPTIONS
The Standard & Poor’s 500 Index is a capitalization-weighted index that is generally considered representative of the U.S. large capitalization market.
The NASDAQ Composite Index is a capitalization-weighted index that is comprised of all stocks listed on the National Association of Securities Dealers Automated Quotation System stock market, which includes both domestic and foreign companies.
The Dow Jones Industrial Average is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.
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