Market View: Week of Oct. 23, 2026
ECONOMIC REVIEW¹
Housing starts declined 5.2% month over month to an annualized pace of 1.22 million units, a four-month low and one of the weakest readings since the pandemic.
Single-family starts fell to a one-year low, while building permits dropped to their lowest level since early 2023, suggesting continued weakness in future construction amid elevated mortgage rates and affordability challenges.
Pending home sales plunged 7.3% month over month (MoM) to an index rating of 66.0, the lowest level since records began in 2001, as elevated mortgage rates continued to weigh on housing demand.
Contract signings declined across all four regions, led by West (-9.2%) and South ( -8.2%) MoM, while nationwide pending sales fell 11.3% year over year, reflecting continued hesitation amid elevated borrowing.
The Conference Board's Leading Economic Indicator (LEI) was unchanged at 99.6 in September after a modest August decline, suggesting stabilization in forward-looking economic conditions.
The index rose 0.6% over the past six months, reversing a 1.1% decline in the preceding six months, an encouraging sign for economic growth.
The University of Michigan's consumer sentiment index edged lower to 48.0 in October from 48.1 in September, reaching a five-month low as elevated prices, higher interest rates, and sluggish hiring weighed on confidence.
One-year inflation expectations rose to 4.7% from 4.6%, while longer-term expectations reached 3.5%, both the highest since May. Buying conditions for durable goods deteriorated to a record low.
How does the most recent economic data impact you?
Housing remains a weak spot in the economy, although the stabilization in LEI suggests housing challenges may be isolated and not indicative of broader economic weakness.
Rising consumer inflation expectations remain a concern, however softer housing activity could provide some relief to inflationary pressures over time.
Mixed economic signals reinforce the importance of incoming data for the Federal Reserve (Fed), as persistent inflation concerns may limit the potential for near-term interest rate relief.
A LOOK FORWARD¹
This week investors will focus on the Fed’s interest rate decision, third-quarter Gross Domestic Product (GDP), Personal Consumption Expenditures (PCE) inflation, durable goods orders, consumer confidence and the Employment Cost Index (ECI).
How does this week’s slate of economic data impact you?
Third-quarter GDP is expected to show continued economic resilience, while durable goods orders and consumer confidence will provide insight into business investment and household sentiment.
September's PCE and the third-quarter ECI will offer insights into underlying price and wage pressures, helping assess whether inflation is moving sustainably towards the Fed's 2% target.
The Fed is widely expected to hold rates steady, with investors focused on its outlook for future policy decisions. Inflation could reinforce expectations for higher interest rates, affecting Treasury yields and equity valuations.
MARKET UPDATE²
| Market Index Returns as of 10/23/26 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | -0.46% | -0.31% | 12.40% | 13.56% | 23.11% | 12.49% |
| NASDAQ | -0.71% | -3.36% | 12.19% | 12.52% | 26.31% | 12.28% |
| Dow Jones Industrial Average | 0.42% | 2.62% | 9.99% | 12.37% | 18.41% | 9.97% |
| Russell Mid-Cap | 0.92% | 2.65% | 14.81% | 14.22% | 19.74% | 7.27% |
| Russell 2000 (Small Cap) | 2.01% | -0.71% | 12.90% | 11.80% | 19.83% | 5.36% |
| MSCI EAFE (International) | -1.52% | -1.59% | 8.57% | 12.02% | 19.11% | 8.42% |
| MSCI Emerging Markets | -2.62% | -7.38% | 14.28% | 15.90% | 22.33% | 6.60% |
| Bloomberg U.S. Agg Bond | 0.54% | 1.87% | -1.10% | -1.20% | 5.13% | -0.16% |
| Bloomberg High Yield Corp. | -0.11% | -0.20% | -0.09% | 0.97% | 8.42% | 3.62% |
| Bloomberg Global Agg | 0.29% | 1.10% | -1.59% | -1.56% | 4.49% | -1.60% |
OBSERVATIONS
Major U.S. equities finished the week mixed as continued pressure on technology stocks weighed on broader markets amid heightened volatility. The Nasdaq experienced its largest daily decline since June on Thursday, falling 2.6%, and finished the week approximately 6% below its recent record high.
The Nasdaq declined -0.71%, and the S&P 500 fell -0.46%, while the Dow Jones gained +0.42%, reflecting a rotation away from technology stocks.
Small-cap stocks outperformed large-cap stocks, with the Russell 2000 gaining +2.01% and mid-cap stocks advancing +0.92%. The strength of smaller companies suggests a broadening of market participation despite continued uncertainty surrounding the direction of interest rates.
International equities underperformed U.S. markets, with developed international equities declining -1.52%, and emerging markets falling -2.62%. Emerging markets experienced the largest losses among major equity indices.
Fixed income markets mostly rebounded as Treasury yields retreated from recent highs, with the 10-year Treasury yield briefly falling below 5% for the first time in nearly a month after peaking near 5.34% earlier in October.
The U.S. Aggregate Bond index gained +0.54%, while international bonds advanced +0.29%. High yield bonds declined -0.11%.
BY THE NUMBERS
Grand Theft Auto VI: The $1 Billion Sick Day: The highly anticipated release of Grand Theft Auto VI on November 19, 2026, could cost the US economy an estimated $1 billion in lost productivity. About 1.5 million American workers are expected to skip work, potentially reducing national productivity by an estimated 2% that day. The estimate assumes an average annual economic output of approximately $70,000 per worker, with employees aged 18 to 30 expected to account for most absences. Technology companies could face the greatest disruption, as some businesses already prepare for employee absences and operational delays. Meanwhile, publisher Take-Two Interactive anticipates more than $1 billion in operating cash flow this fiscal year, highlighting the game's economic significance. Ease in as it launches threatens to temporarily disrupt workplace productivity.³
College Tuition: Fewer Students, Bigger Discounts: The University of Vermont (UVM) and Middlebury College are expanding tuition discounts as universities compete for students amid demographic challenges. UVM reported a 14.5% decline in first-year enrollment, contributing to an initially projected $12 million budget shortfall that the university later closed through cost reductions. To attract students, UVM will offer tuition discounts exceeding 35%, saving eligible out-of-state students more than $18,000 annually on its typical $46,600 tuition. Middlebury, where annual tuition is about $72,900, is expanding free tuition eligibility to families earning up to $175,000, up from $65,000. While Middlebury's enrollment has remained stable, both institutions are responding to increased competition for students, suggesting the cost of higher education may become more negotiable.⁴
Disclosures
The statements provided herein are based solely on the opinions of the Osaic Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Osaic Wealth, Inc. (“Osaic”) or its affiliates.
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1 Data obtained from Bloomberg as of 10/23/26.
2 Data obtained from Morningstar as of 10/23/26.
3 Grand Theft Auto IV: The $1 Billion Sick Day | audacy.com
4 College Tuition: Fewer Students, Bigger Discounts | vtdigger.org
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