| Index | 1 Month % | QTD % | YTD% |
| S&P 500 Total Return | -0.35 | 2.30 | 12.75 |
| NASDAQ Composite** | 1.86 | 2.47 | 15.57 |
| S&P Developed Ex-US BMI* | -2.91 | 0.31 | 14.63 |
| Dow Jones Commodity (DJCI) | 1.07 | 16.86 | 36.71 |
| S&P US Aggregate Bond* | -2.27 | -3.03 | -2.21 |
U.S. Stocks Continue Higher Despite Rising Interest Rates
The third quarter of 2026 challenged a common market assumption: that rising interest rates automatically lead to lower stock prices. Despite Treasury yields reaching multi-year highs, U.S. equities continued to move higher, with the S&P 500 gaining 2.3% for the quarter and 12.75% year-to-date. The Nasdaq Composite remained even stronger, advancing 15.57% year-to-date.
Several factors helped fuel equity performance:
- Strong corporate earnings expectations supported investor confidence.
- U.S. economic growth remained resilient despite higher borrowing costs.
- Large-cap technology and growth stocks continued to attract investor capital.
- Ongoing enthusiasm surrounding artificial intelligence remained a tailwind for many technology-related companies.
Technology and Energy Lead the Market
Market leadership was concentrated in a handful of sectors. Information Technology gained 28.38% year-to-date, while the Energy sector surged 40.28% year-to-date. These sectors benefited from strong earnings growth, AI-related investment, and rising commodity prices.
Meanwhile, smaller companies struggled. Mid-cap and small-cap stocks lagged the broader market as investors favored larger companies with stronger balance sheets and more predictable earnings in a higher-rate environment.
Why Bond Prices Fell During the Third Quarter
Bond markets faced a much different environment. The S&P U.S. Aggregate Bond Index declined 2.27% during September and remains down 2.21% year-to-date.
The primary reason was rising interest rates. Inflation concerns, expanding fiscal deficits, and continued monetary tightening pushed Treasury yields higher throughout the quarter. Most notably, the U.S. 10-year Treasury yield surpassed 5% for the first time since 2007.
Because bond prices generally move inversely to interest rates, higher yields translated into lower bond prices across much of the fixed income market. Investment-grade bonds, Treasuries, and municipal bonds all experienced pressure as rates increased.
Higher Yields May Create Future Opportunities for Bond Investors
While bond returns were disappointing during the quarter, long-term investors have a silver lining. As rates rise, newly issued bonds offer more attractive income potential.
The yield on the S&P U.S. Aggregate Bond Index reached 5.49% at the end of September, a level not seen in many years. For income-focused investors, today’s higher yields may provide better future return prospects than were available during the ultra-low interest rate environment of the past decade.
One notable exception was leveraged loans, which posted positive returns because their floating-rate structure benefits when interest rates rise.
Commodities Deliver Strongest Returns of the Quarter
Commodities were among the best-performing asset classes during the third quarter. The Dow Jones Commodity Index gained 16.86% during Q3 and is now up 36.71% year-to-date.
The energy sector was the primary driver. Rising crude oil prices pushed the S&P GSCI Energy Index up 45% during the quarter and nearly 120% year-to-date.
Additional factors supporting commodity performance included:
- Strong demand for energy commodities.
- Continued economic activity supporting industrial metals.
- Ongoing inflation concerns increasing demand for real assets.
These results highlight the role commodities can play as a portfolio diversifier, particularly during periods of rising inflation and interest-rate volatility.
Key Takeaways for Investors
The third quarter demonstrated that markets are often driven by multiple forces at the same time. Strong corporate earnings and economic growth helped propel stocks higher, even as rising rates weighed on bonds. Meanwhile, commodity markets benefited from higher energy prices and inflation-related demand.
As we move into the final quarter of 2026, investors should continue monitoring:
Interest Rate Trends
Higher rates remain a key driver for both stock and bond valuations.
Corporate Earnings
Earnings growth has been a major source of market strength and will likely remain a critical factor.
Inflation and Energy Prices
Changes in inflation expectations and commodity prices could significantly impact market leadership moving forward.
Final Thoughts
The 2026 market environment continues to reinforce the importance of diversification. While equities have benefited from strong fundamentals, bonds now offer higher income opportunities, and commodities have provided an effective hedge against inflationary pressures. Maintaining a disciplined, long-term investment strategy remains one of the most effective ways to navigate changing market conditions.
Source: S&P Dow Jones Indices LLC and/or its affiliates. Data as of September 30, 2026, except * as of September 29, 2026. Index performance based on total return (USD). Past performance is no guarantee of future results.**NASDAQ Data as of September 30, 2026 Overview for COMP
Disclaimer Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors and Synergy Wealth Management are separate entities.
