October 12, 2026

The stock market finished its record-setting week with gains on Friday, even as other financial markets remained indecisive.

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The S&P advanced by 0.6% for its first gain since setting its all-time high three days earlier with a close of 7811. The Dow added 423 points to 51,654 for a 0.8% advance while the Nasdaq rose by 0.6% to 27,366.

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The strength came as oil prices continued to bounce around due to uncertainty about when the war with Iran will allow the global energy industry to return to normal as the price of crude ended at $104.72.

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Treasury yields went both ways in the bond market and ended with the 10-year at 5.24% and recently touched its highest level since 2002 due to high inflation, the U.S. government’s huge debt load and signs that the economy is continuing to grow. In the meantime, the average 30-year fixed rate mortgage has already leapt to its highest level in nearly three years at an average of 7.48%.

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Then we have the fact that Open AI and Anthropic, the two most important companies in the AI ecosystem, are not publicly traded with swift reactions to confusing news reports.

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On the other hand, S&P earnings growth for the third-quarter is now supposed to be 29.6%, which is the third straight quarter above 25%, and the gains this time come from energy and information technology areas.

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The calendar for third-quarter earnings this week begins to get a little heavier with the following lineup:  Tuesday – C, JPM, GS, WFC and Dow components – JNJ, UNH; Wednesday – BAC, BLK, MSG; Thursday – SCHW, IBKR, JBHT; Friday – TRV.

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Economic reports include: Wednesday – September CPI; Thursday – September PPI, September retail sales; Friday – September industrial production and capacity utilization.

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The following comments were from the NYTimes piece about the latest trend in funds: At the start of the year, one would have thought that technology funds would have been the best bet. Yet that’s not what happened for fund investors in the three months through September. Tech stock funds tracked by Morningstar dropped 1.4 percent, which really wasn’t too bad in a quarter with losses nearly everywhere one looked.

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Instead, the big winner was energy.

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The average U.S. energy stock fund rose 11.6 percent for the quarter — a truly splendid return compared with a decline of 1.8 percent, on average, for domestic stock funds and a loss of 2.2 percent for the average taxable bond fund. International stock funds fared poorly, too, with a loss of 0.6 percent, on average. Municipal bond funds in the United States, which are typically sheltered from some state and local taxes, were even worse, averaging a decline of 5.6 percent.

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What changed things in the stock and bond markets in those months was mainly the war with Iran, which drove up the prices of oil, gas, refined fuel and other energy products and contributed mightily to an interest-rate surge that has disrupted the financial world.

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Even artificial intelligence stocks faltered for a while, though they have been rebounding this month, propelling the S&P 500 and the tech-heavy Nasdaq 100 stock indexes to new highs this week.

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The weak stretch in the markets is a reminder of how difficult it is to make consistent, accurate forecasts about particular sectors or asset classes, especially over short periods.

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Most people who hold stocks or bonds do so through funds — mutual funds, exchange-traded funds and similar investment pools, in the United States and many other countries. Third-quarter returns for those U.S. funds are rolling in now, and, nearly across the board, they reflect the poor to mediocre performance in financial markets.

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Still, if your own results seem disheartening, it’s important to remember that over the last year, and five years, the stock market has been so strong that there’s a good chance your portfolio has done well, even though bond funds have had a historically bad run recently.

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The recent outperformance of energy stocks is an argument for broad diversification, using index funds that track the overall global stock and bond markets as core investments. At least that way you will receive overall market returns, even if you are surprised by global or domestic events and by the performance of specific stocks or sectors.

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Bonds have been a drag on portfolio returns, but they are a classic part of a diversified portfolio because they are likely to offer some stability when the stock market plummets.

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People saving for retirement, or already in it, endured modest declines nearly across the board in funds designed expressly for them. But in a way, the funds worked as anticipated. Their diversified holdings generally made the recent losses mild, while maintaining solid returns over longer periods.

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The so-called target date funds — all-in-one investments that change in composition as you approach, reach or pass a designated retirement year.

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Funds with a target date of 2060 or further into the future dropped 0.4 percent for the quarter — but they gained 14.2 percent over 12 months and 9.6 percent, annualized, over five years, according to Morningstar. Retirement income funds, which are typically for people for whom retirement has already arrived, lost 1.6 percent. Such funds have heavy allocations to bonds, which have pulled down their returns lately. But retirement income funds gained 4.7 percent over 12 months and 3.7 percent, annualized, over five years.

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Energy stock funds were among the high points in the quarter. Their average 11.6 percent return was driven in large measure by outstanding performances for oil refiners, with windfall profits because of the war. Valero Energy gained 48.9 percent over the three months, and Marathon Petroleum jumped 54.7 percent.

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By contrast, the 1.4 percent loss for the tech funds in the Morningstar database appears to be a combined result of erratic performances for many big tech stocks along with poor choices made by many active fund managers.

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For example, Alphabet lost 3.7 percent for the quarter, as some investors began to worry about the vast sums the company is pouring into A.I. infrastructure. Hewlett Packard Enterprise, a much smaller spinoff of the venerable Silicon Valley computer pioneer Hewlett-Packard, gained 41.6 percent on strong demand for A.I. services. Large holdings in Alphabet hurt many tech funds in the quarter but contributed to great returns over longer periods. Over the five years through September, Alphabet returned 21 percent, annualized, a magnificent performance by any measure.

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Keep in mind that these various returns tell us only what has already happened, not what is about to occur. They are simply a reminder that if you invest in the right company at the right moment, you will prosper. But if you put your cash in the wrong stock or sector, you will pay the consequences.

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Numerous studies by S&P Dow Jones Indices, Morningstar and Dalbar suggest that it is extremely difficult for most professional fund managers to make such choices correctly and consistently. That is a reason to remain an index fund investor, choosing to accept the market averages without trying to outperform the overall market through timing or stock selection.

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That approach has worked reasonably well in recent years. Including dividends, the Vanguard S&P 500 E.T.F., which tracks the benchmark S&P 500 stock index, returned 2.3 percent for the quarter, 15.8 percent for the 12 months through September and 13.8 percent over five years, annualized, according to FactSet.

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These index returns trounced those for the average domestic stock fund in Morningstar’s database, which were –1.8 percent over three months, 13.2 percent over 12 months and 9.2 percent over five years, annualized. Index funds have been beating the average domestic stock fund most of the time for more than two decades. Of course, every day and every year, there will be individual sectors, funds and stocks that do better than an index.

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Moderna, for example, advanced by 177% in one day in August when it announced that it had developed, with Merck, an experimental cancer vaccine that extended the time before melanoma recurred in a clinical trial. Through Wednesday, its stock had gained more than 500 percent this year.

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Bond funds have been far less impressive. Nearly all of them have been hit by rising interest rates. That’s because when bond yields rise, as they have lately, prices fall, and bond funds must account for these price declines on a daily basis. Yet many funds may benefit from these upward yield shifts now, precisely because the higher rates available for newly purchased bonds will generate a richer income stream.

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Some of the most obvious bets haven’t worked out for fund investors lately. The markets and the economy are volatile, making it exceedingly difficult to forecast what the future may hold.

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One should start by making sure that you’ve got enough cash to protect yourself if the stock market crashes, and then layering in enough bonds to produce an adequate income stream and to buffer your stock portfolio.

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Then, if your horizon is long enough — measured in years and, better yet, decades — stick with the stock market, because it has produced the best returns over the long term.

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But diversify. Will energy stocks dominate in the years ahead? Will A.I. be the Big Thing propelling the stock market and the economy? We’ll find out eventually.