Market Commentary Q3 2026

Markets continued to build on a strong start to 2026, despite a few twists and turns for investors in the third quarter. U.S. stocks reached new highs, supported in part by continued strength in technology companies, before giving back some ground later in the quarter. Rising interest rates, global tensions, and questions surrounding artificial intelligence all played a role in shaping the market environment. Meanwhile, the Federal Reserve raised its benchmark interest rate in September, while the yield on the 10-year U.S. Treasury climbed to its highest level since 2002.

Even with these shifting conditions, major U.S. stock indexes ended the quarter in positive territory. Results varied across international markets and bonds, highlighting how different parts of a diversified portfolio can experience different outcomes over the same period. This is a good reminder that markets don’t all respond to changing conditions in the same way. A diversified portfolio, built around sound research and a thoughtful financial plan, can help investors navigate different market environments while staying focused on their long-term goals rather than trying to predict what comes next.

A Closer Look at Market Performance 

The S&P 500 gained 2.3% during the third quarter, while the Nasdaq rose 2.6%. International markets delivered more modest results, with developed markets outside the U.S. gaining 0.9%. Emerging markets dipped 0.4% for the quarter but remained up an impressive 23.4% year to date through September.

The chart below provides a closer look at how major markets performed during the quarter and year to date.

Quarter 3 (July 1, 2026 – September 30, 2026) & Year-to-Date Index Returns

What High Interest Rates May Mean for Investors

Interest rates were another important development this quarter. In September, the Federal Reserve raised its benchmark interest rate for the first time since July 2023, bringing its target range to 3.75% to 4.00%. The yield on 10-year U.S. Treasury bonds also rose above 5%, reaching its highest level since 2002.

Higher interest rates can create both challenges and opportunities. Borrowing may become more expensive, and existing bonds can lose value as yields rise. At the same time, higher yields can provide more attractive income opportunities for investors. So, do higher interest rates mean investors should change their mix of stocks and bonds? Historical market data offers helpful perspective. Looking at U.S. market performance from 1927 through 2025, the average return of stocks above short-term Treasury bills was not meaningfully different in higher-rate versus lower-rate environments. In other words, one economic indicator alone doesn’t necessarily tell us how an investment portfolio should be positioned. Investment decisions are best made in the context of an investor’s broader financial plan, goals, and time horizon.

Looking at the Bigger Picture

Energy prices and geopolitical developments also made headlines during the quarter. Rising oil prices, amid tensions in the Middle East, raised questions about how energy costs could affect consumers, businesses, and inflation. As we move into the final months of the year, many of these current factors will continue to shape the market environment. We can’t predict exactly how these factors will unfold, but we can focus on what we can control: maintaining a thoughtful investment strategy, staying diversified, and making decisions that align with long-term goals.

Where You’re Invested Matters

Markets will always have their ups and downs, and there’s no shortage of headlines competing for our attention. But at the end of the day, investing is about much more than market performance. It’s about the people, experiences, and goals that give your wealth meaning.

At Petersen Hastings Wealth Advisors, our approach starts with understanding where you’re most invested in life. From there, we work alongside you to build a personalized financial plan designed to support what matters most through changing markets and the different seasons of life. While we can’t control the markets, we can be thoughtful about how we prepare for them. By staying focused on your goals and keeping your financial plan aligned with your priorities, you can spend less time worrying about every market headline and more time focused on living the life you’ve worked hard to build.

As we look ahead, our focus remains on helping you navigate financial decisions with clarity and confidence. If you have questions about recent market developments or how they relate to your financial plan, our team is always here to help. On behalf of all of us, we wish you a healthy fall heading into the holiday season.