Spooked

As Halloween draws near, equity investors have been a bit spooked of late.  In general, investors seem to be questioning the veracity of the AI story.  Specifically, the primary concern seems to be over the apparent insatiable desire on capital expenditure spending by hyperscalers and other AI related companies as they build out their systems.  This ongoing growing concern has caused some angst in the markets. Today was particularly ugly nearly across the board and even more so in the tech space.   The NASDAQ was off some 2.8% today and down over 5% for the month of October.  Semiconductor stocks took the brunt of the blow, being off some 7% today, and over 15% for the month.  Furthermore, this marks the second consecutive month for the S&P 500 to close down, albeit mildly relative to the high-flying tech space.  Clearly, not everything is a bowl of candy or a box of chocolates.

Trick or Treat

Potential tricks include:

• AI companies must demonstrate that their unprecedented capital expenditures will result in improved profits.  Should this not materialize, investors might become more frightened. 
• Inflation is concerning and needing to be addressed.  Yesterday’s PCE index (the Federal Reserve’s preferred inflation gauge) showed prices are up 3.6% YOY.  This is too high, especially relative to the Fed’s 2% preferred target. Soon, the Fed will need to hike rates further.
• In fact, according to the BLS (Bureau of Labor Statistics) candy and chewing gum prices are up 7.7% YOY.  

• The bond market continues to reflect concerns by investors.  Please see The bond market is acting up.  Yields are rising.  Why? Market Update: Corporate Earnings are Booming! | Joyce Wealth Management, LLC from September 1, 2026, for additional information.

• Geopolitical concerns remain elevated and have the potential to escalate.

• The US massive debt level standing at over $40 trillion, is concerning. 

• The evolution of capitalism and implications might cause a contraction in the multiple investors are willing to pay.

• The $6.3 billion Crypto heist erodes confidence in the markets. 

Potential treats include:

• Strong Earnings, Low Valuation, and High Targets. Ironically, at the time technology stocks are getting slammed, corporate earnings by and large remain positive.  In fact, with over half of the S&P 500 having reported for the third quarter, corporate earnings are up over 30% YOY, according to FactSet.  Should this continue, as anticipated, this will mark the third consecutive quarter for earnings to increase by over 25% YOY. 
• As a result, the S&P 500 is currently trading below its five- and ten-year averages, at the very time that corporate earnings are growing at a significantly higher rate than normal.  This is primary reason we remain bullish on longer term expectations for the equity markets. 
• We are in good company.  As of today’s FactSet report, the bottom-up one-year price target for the S&P 500 currently stands at 9328.  That is some 23% higher than today’s S&P 500 close of 7580.
• AI will likely transform the world in greater ways than one can imagine: Biotech/pharma cures, major technological improvements, cost efficiencies, productivity, and higher profits.
• Seasonality – although not a primary cause for optimism, a nice backdrop is knowing that November, December, and January comprise the best consecutive three months of returns historically.
• Mid-terms will soon be over.  Historically, the markets perform strongly once elections are over.  Per Capital Group, since 1950, the average one-year return following midterm elections is over 15% for the S&P 500, double other years’ returns over the same 12-month period.

 Happy Halloween   

Although we may experience additional tricks along the way, longer term investors have more treats ahead.  As you await little ghosts and goblins at your front door, consider any changes to your goals and objectives, risk profile, time horizon, or cashflow needs. If discussions or changes are warranted, we’d love to take part.

Thank you!

It is a treat working with our investors, many of whom have entrusted us with their lifesavings.  We thank you for your continued business, and for the confidence you place in us.  We are here should you need anything.  Happy Halloween!

Not an offer or Advice: This commentary is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any specific security or to adopt any particular investment strategy. The views expressed represent the current opinions of Joyce Wealth Management as of 10/30/26 and are subject to change without notice