Third Quarter 2026 Market Recap
The third quarter offered investors a reminder that a strong economy does not always make for a smooth market. Corporate earnings and business investment remained healthy, but higher energy prices and renewed inflation concerns pushed interest rates up and made investors more selective about what they were willing to pay for future growth.
For the quarter, the S&P 500 returned 2.30%, the Dow Jones Industrial Average returned -2.34%, and the Nasdaq Composite returned 2.47%. Those figures tell only part of the story. Market leadership shifted as investors weighed strong results from technology and other growing businesses against the cost of funding their expansion. The buildout of artificial intelligence continues to create demand for chips, data centers, power, and the equipment needed to connect them. It also requires enormous spending. We think it is reasonable to ask when that spending will produce attractive returns for the companies paying for it.
The conflict involving Iran was another important influence on markets. Oil prices rose again late in the quarter, increasing costs for households and businesses. Higher energy prices also complicated the Federal Reserve’s effort to bring inflation down. After holding its policy rate steady in July, the Fed raised it by a quarter of a percentage point in September. Bond yields climbed as investors adjusted to the possibility that interest rates could stay higher for longer. For the quarter, the Bloomberg Aggregate Intermediate Government/Credit index returned -1.88%.
There was encouraging news beneath these pressures. Companies continued to invest, employment remained relatively firm, and the economy showed resilience. At the same time, an economy that can absorb higher rates may give the Fed less reason to ease them soon. That tension helps explain why good economic news was sometimes met with a muted response from stocks and bonds.
Our outlook does not depend on predicting the next move in oil prices, interest rates, or the market. We continue to look for profitable businesses with capable management teams, durable prospects, and sensible approaches to capital allocation. Price matters, especially when expectations for a company are high. Periods like this can test investors’ patience, but they can also create opportunities to own good businesses at more attractive valuations. We will remain disciplined about both the companies we own and the prices we pay for them.
The information contained herein is general in nature and for informational purposes only. It should not be considered investment advice or as a recommendation of any particular strategy or investment product. This is not a solicitation or an offer to buy or sell any specific security. We cannot guarantee the accuracy of information from third parties.
Past performance is not indicative of future results. The material above has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed, Beese Fulmer Private Wealth Management ("Beese Fulmer") makes no representation or warranty as to the accuracy or completeness of the information, which should not be used as the basis of any investment decision. Information contained on third-party websites that Beese Fulmer may link to is not reviewed in their entirety for accuracy and Beese Fulmer assumes no liability for the information contained on these websites. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Beese Fulmer. For more information about Beese Fulmer, including our Form ADV brochures, please visit https://adviserinfo.sec.gov and search for our firm name.
