As we get ready for 2026, investors are faced with some uncertainty about the path ahead. Consumer confidence has deteriorated, the jobs market seems to be slowing, and inflation has started to tick up. But against this backdrop, the market still seems positioned for another year of solid gains. So, what are the risks—and the opportunities—as we begin a new year?

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. 

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. 

“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. 

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. 

With the latest jobs data weaker than expected, many—including the equity markets—are counting on a rate cut at the Fed's next meeting. In this month's episode of the Market Observatory, Sam and I discuss what's ahead, including:

After a volatile first four months of 2025, it was a good summer for investors to go on vacation, as markets, for the most part, went up weekly. In fact, the major equity indices closed August near their all-time highs.