As we enter 2026, we do so with the combined power and efforts of LPL Financial and Commonwealth. In the spirit of that partnership, we encourage you to check out the LPL Research team’s 2026 Outlook,* available now. I think you’ll find the team’s analysis and insights to be valuable as you help clients plan for the year ahead. With that same goal in mind, I’d like to provide my thoughts on what investors can expect in 2026. 

After declines in early November, a late-month rebound brought the S&P 500 and Dow Jones to positive territory, although the technology-heavy Nasdaq ended the month down 1.45 percent. Turning to the economy, a delayed employment report showed a rebound in hiring in September, following modest job losses in August. But the unemployment rate rose to 4.4 percent, marking the highest level since late 2021.

The government shutdown is over, but when will the economic data return? That's the big question for the Fed—and for investors. In this month's episode of the Market Observatory, Sam and I discuss which economic data we're likely to see soon, what the quality of that data will be, and whether there are some reports we may not get at all.

The government shutdown came to an end last night after 43 days, making it the longest shutdown in history. We will leave it to the political commentators to pass judgment on what it means for the decision-makers in Washington. From our perspective, though, we recognize that the shutdown was beginning to have a significant impact on the economy. 

The S&P 500, Dow Jones, and Nasdaq posted positive returns in October, with falling short-term interest rates and strong corporate earnings supporting markets. In fact, the average Q3 earnings growth rate for the S&P 500 stood at nearly 10.7 percent at the end of October, above analysts’ 7.9 percent estimate at the end of September.

“If you are driving in a fog, you slow down.” — Fed Chairman Jerome Powell, October 29, 2025 

What does a data-dependent Fed do when the data isn't available? In this month's episode of the Market Observatory, Sam and I discuss how the government shutdown is affecting the central bank and investors, including:

As of midnight Tuesday, the U.S. government shut down, as lawmakers couldn’t reach an agreement on a short-term bill to continue funding government expenditures. Currently, none of the 12 appropriations bills have been passed. This is the first shutdown since December 2018. There is certainly a human element to consider, as many government workers will be furloughed and others will continue to work without pay. Benefit payments and tax collections will continue. 

September was another positive month for markets, as the S&P 500, Dow, and Nasdaq set new record highs. The international story was similar, with developed and emerging markets gaining for the month. Short-term interest rates also fell in September, as the Fed resumed cutting rates at its mid-month meeting. Markets anticipate one or two additional rate cuts by year-end.

This week’s Fed meeting resulted in a much-anticipated interest rate reduction of 25 bps, to a range of 4 percent to 4.25 percent. This move followed a nine-month pause in its rate-cutting cycle, which began a year ago. Historically, equity markets have responded favorably to rate cuts after a pause of six months or more. But it’s been a while since we last saw this pattern. The Fed has not resumed a reduction cycle after a lag of that duration since July 2003. Markets have changed a lot since then.