The S&P 500 and Nasdaq Composite have gained 12% in 2026 despite economic headwinds, on track for a fourth straight year of double-digit gains for the first time since the late 1990s. Inflation accelerated in September as the Iran conflict kept energy prices high: CPI rose 3.7%, the highest since May and above the 3.6% consensus, while core CPI rose 2.6%, the highest since June. The Fed raised rates once in September, and CME Group's FedWatch tool points to a second quarter-point hike in December and a third in March, bringing the federal funds target range to 4.25% to 4.5%, a level last seen in August 2025. The article notes that rate-hike cycles have often coincided with stock market corrections, while Morgan Stanley Wealth Management's Lisa Shalett sees the bull case as intact, supported by strong earnings and AI investment, but flags higher bond yields, elevated oil prices, policy uncertainty and strain on lower-income consumers as risks. It suggests investors focus on high-quality stocks with strong fundamentals and reasonable valuations while preparing for a potential decline.
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S&P 500inflationinterest ratesFedAI investment
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Related tickers and likely impact
SPY
▼ Likely negativeSPDR S&P 500 ETF
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/23/2026 | 759.85 |
| Change that session | -0.54% |
QQQ
▼ Likely negativeInvesco QQQ Trust
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/23/2026 | 704.39 |
| Change that session | -0.01% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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