Capital Market Outlook

Summary

• Q2 real consumer spending measured by Personal Consumption Expenditures was revised up to an annualized rate of 3.8%, exceeding the 20-year average of 2.3%.
• September monthly total credit and debit card spending per household rose 6.2% year-over-year, while spending excluding gasoline increased 5.1% year-over-year.
• After-tax wage growth for lower-income households rose 4.7% year-over-year in August, outpacing the 3.5% growth for higher-income households.
• Lower-income discretionary spending increased 5.7% year-over-year in August, nearly matching the 5.9% pace for higher-income households.
• The ratio of household debt to disposable personal income remains near its lowest level since the late 1990s.
• Personal saving estimates over the past year were revised higher by $320 billion, or 39%, with the revised savings rate remaining above 4%.
• U.S. household net worth rose $12.8 trillion to a record $195.9 trillion in Q2, driven largely by $10.7 trillion in gains from Equities.
• Household net worth relative to disposable income climbed to a record 8.3, while home equity reached an all-time high of $35.8 trillion.
• The S&P 500 is up roughly 130% since the October 2022 lows, marking the fourth year of the current bull market.
• The Magnificent 7 delivered a 344% return since October 2022, while the U.S. Technology sector returned 277% over the same period.
• The bull market has endured events including the Silicon Valley Bank failure in March 2023, an inverted yield curve, the April 2025 trade-policy shock, 2026 energy shocks, and rising midterm election uncertainty.
• The Chief Investment Office remains overweight Equities, favors U.S. stocks, and views higher bond yields as attractive for adding income and extending duration.
• A supply side-led economic expansion continues, driven by capital investment in the AI buildout, solid consumer spending, and fiscal tailwinds.
• The Federal Reserve is expected to pause rate hikes before reassessing inflation, growth, and employment trends later in 2027.
• Overall U.S. earnings growth is projected to be in the low to mid double-digit percent range in 2027.
• Credit risks developing and higher energy prices for longer are identified as the main risks to the bull case for Equities extending into 2027.
• Real U.S. GDP is forecast at 2.4% for 2026 and 2.3% for 2027.
• CPI inflation is projected at 3.4% for 2026 and 2.7% for 2027.
• The unemployment rate is forecast at 4.2% for 2026 and 4.1% for 2027.
• The Fed funds rate is projected to end 2026 at 4.38% and remain at 4.38% for 2027.
• The S&P 500 closed at 7,811.54 with a year-to-date return of 15.1% as of October 9, 2026.
• WTI Crude oil was priced at $91.85 per barrel with a year-to-date return of 60.0%.
• Gold spot prices were $4,194.24 per ounce with a year-to-date return of -2.9%.
• The 10-year U.S. Treasury yield stood at 5.24% as of October 9, 2026.