Stocks were mixed – Risk Off continues to dominate – Update 10/26/26

Housing and Consumer Demand: Is the U.S. Economy Losing Momentum?

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• Quant Alpha’s II – Up over 45% since June 2025

• Quant 30 – Up over 53% since June 2025

• Quant Alpha’s – Legacy – Up over 260% since April 2023

• Education – Housing and Consumer Demand: Is the U.S. Economy Losing Momentum?

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USA Stock market week ending 10/23/26

• S&P 500 (SPY): Declined 0.4% for the week.

• Nasdaq Composite (^IXIC): Fell 0.7%, posting the largest decline among the major stock indexes listed.

• Dow Jones Industrial Average (DIA): Gained 0.4%.

• Russell 2000 (IWM): Rose 2.0%, leading the group as small-cap stocks outperformed.

• S&P 500 Momentum ETF (SPMO): Dropped 1.6%, underperforming the broader market.

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Market Drivers this Week (10/26/26 – 10/30/26)

• Monday, October 26 — The Dallas Fed manufacturing survey is due at 10:30 AM ET, and Treasury will auction $69 billion in 2-year notes.

• Tuesday, October 27 — Consumer Confidence and FOMC Meeting: The Fed begins its two-day meeting. September durable goods orders, new-home sales, and October consumer confidence are scheduled for release. Treasury will also auction $70 billion in 5-year notes.

• Wednesday, October 28 — Fed Decision and Big Tech Earnings: The Fed announces its rate decision at 2:00 PM ET, followed by a press conference at 2:30 PM. Markets are pricing in roughly a 90% chance of no change to the 3.75%–4.00% target range, while expectations point to a possible December hike. Microsoft and Alphabet are scheduled to report earnings after the close, putting AI spending and cloud growth in focus.

• Thursday, October 29 — GDP, Inflation and ECB Decision: Third-quarter advance GDP, September PCE inflation, and weekly jobless claims are all scheduled for 8:30 AM ET. Amazon is scheduled to report after the close.

• Friday, October 30 — Labor Costs and Month-End Positioning: The third-quarter Employment Cost Index is due at 8:30 AM ET.

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The CNN Fear & Greed Index

The CNN Fear & Greed Index remained firmly in Extreme Fear, rising slightly from 18 on October 16 to 21 on October 23. Despite this modest improvement, investor sentiment remains deeply pessimistic. The index has fallen 34 points from 55 on August 21, when sentiment was in Neutral territory. After briefly returning to Neutral at 45 on October 9, the index moved back into Fear and then Extreme Fear. Persistent pessimism may create opportunities for patient, disciplined investors, but extreme fear alone is not a reliable signal that the market has reached a bottom.

• 10/23/26 – 21 Extreme Fear

• 10/16/26 – 18 Extreme Fear

• 10/9/26 – 45 Neutral

• 10/2/26 – 31 Fear

• 9/25/26 – 37 Fear

• 9/18/26 – 29 Fear

• 9/11/26 – 33 Fear

• 9/4/26 – 42 Fear

• 8/28/26 – 54 Neutral

• 8/21/26 – 55 Neutral

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The Quant Model Portfolios had another down week with Risk Off firmly remaining in control in the stock market. With the USA mid-term elections fast approaching and the possibility of a renewed conflict in the middle east very real, it is wise to be cautious in the market. Look for attractive lower prices for your favorite stocks over the next few weeks.

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Model Portfolio Quant Alpha’s II

This week’s new update, if any, is being released to the paid subscribers. This Portfolio continues to significantly outperform its benchmark, 45% versus 20%. It has 31 members.

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Model Portfolio Quant 30

This week’s new update, if any, is being released to the paid subscribers. This Portfolio continues to beat its benchmark by a wide margin, 53% to 20%. It has 30 members in it.

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Model Portfolio Dividend and Growth 25

This week’s new update if any is being released to the paid subscribers. The Portfolio is up +3% and the benchmark was up +2% since 9/28/26.

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Model Portfolio Quant Top Stocks

The portfolio is -10% with the benchmark +1%.

A Thursday morning post will update the Adds and Removals for this Portfolio.

Added Thursday: PBR.A (Petrobras)

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Model Portfolio Quant Alpha’s – Legacy

The portfolio is up over +260% since it began in 2023. It has 17 stocks in it. Powell industries is now a 7 bagger. Celestica is now a 10 bagger

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Performance to 10-23-2026

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Housing and Consumer Demand: Is the U.S. Economy Losing Momentum?

Retail Sales Look Strong, but Gasoline Is Boosting the Numbers

September retail sales increased 0.8%, following an upwardly revised 1.3% gain in August. However, gas-station sales jumped 6.4%, while sales excluding gas stations rose just 0.2%, suggesting that higher fuel costs accounted for a significant portion of the increase rather than stronger demand across the broader economy.

The figures are nominal and are not adjusted for inflation, so higher prices can make spending appear stronger than actual purchasing activity. Consumer spending remains resilient, but rising gasoline costs could leave households with less money for discretionary purchases.

Inflation Is Accelerating and Squeezing Purchasing Power

September consumer prices rose 0.6% month over month and 3.7% year over year, up from 3.4% annual inflation in August. Core CPI, which excludes food and energy, increased 0.3% monthly and 2.6% annually, while gasoline prices surged 9.1% during September.

The Federal Reserve had already raised its benchmark rate in September to 3.75%–4.00%, before the latest inflation report was released. With prices rising and borrowing costs elevated, households could face increasing pressure on discretionary spending in the months ahead. The Fed’s next policy decision is scheduled for October 28.

Consumer Sentiment Has Fallen to Extremely Weak Levels

The University of Michigan’s preliminary October Consumer Sentiment Index fell to 46.3, down from 48.1 in September and below economists’ expectations. The Current Economic Conditions Index dropped to 44.7, a record low, reflecting growing frustration with high prices and borrowing costs.

One-year inflation expectations increased to 4.7%, while long-term expectations rose to 3.5%. The disconnect between consumer pessimism and continued spending is worth watching: households are still making purchases, but deteriorating confidence could eventually translate into weaker demand, particularly among lower-income consumers. The final October sentiment reading is due Friday, October 23.

Housing Remains Weak Despite a Small Rebound in Sales

Existing-home sales rose 1.5% in September to a seasonally adjusted annual rate of 3.99 million units, according to the latest National Association of Realtors report. However, sales remained below the four-million annual pace and were down 2.2% from a year earlier.

Affordability remains a major obstacle. The median existing-home price reached $417,500, while Freddie Mac’s average 30-year mortgage rate held at 7.40% as of October 15, compared with 6.27% a year earlier. Although housing inventory has improved, elevated financing costs and high home prices continue to limit the number of buyers able to enter the market.

In Summary

The latest data does not indicate that consumer spending has collapsed, but it does reveal growing pressure beneath the headline numbers. Higher gasoline prices are supporting nominal retail sales, while inflation, weak sentiment, and mortgage rates near 7.4% are weighing on household purchasing power and housing activity.

For investors, the key question is whether resilient spending can continue if inflation remains elevated and borrowing costs stay high. If household demand weakens, consumer-facing companies could face slower revenue growth and margin pressure heading into the holiday quarter.

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All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated.