Fidelity Bank – Wealth Management
Market Recap – October 2026
October produced another month of significant dispersion across asset classes, styles, and sectors. U.S. equities were mixed as value-oriented stocks continued to outperform growth, while small-cap equities delivered modest gains despite weakness among large-cap benchmarks. International markets moved lower, with emerging markets experiencing particularly sharp declines amid renewed risk aversion and weaker commodity-sensitive areas of the market. Fixed income recovered a portion of September’s losses as interest rates stabilized, allowing most core bond sectors to post positive returns. Real assets were mixed, with continued strength in energy-related commodities offset by broad weakness across precious metals, agriculture, and industrial metals. The result was a market environment characterized by continued leadership from value-oriented equities, defensive sectors, and energy-related assets, while growth-oriented and internationally focused investments faced renewed pressure.
Equity
U.S. equities were mixed in October as value stocks substantially outperformed growth. The S&P 500 declined 0.87%, while the Russell 1000 fell 0.69%. Performance beneath the surface was markedly different, however, as the Russell 1000 Value Index gained 4.38%, while the Russell 1000 Growth Index declined 6.09%. The significant divergence reflected investor preference for companies with stronger current cash flows, more reasonable valuations, and less sensitivity to higher interest rates.
Small-cap equities delivered a different result. The Russell 2000 gained 0.58%, supported by strength in value-oriented companies. Russell 2000 Value advanced 2.51%, while Russell 2000 Growth declined 1.30%, extending the trend of value leadership that has characterized much of the second half of the year.
Sector performance reflected this rotation. Energy led all sectors, surging 13.90%, supported by continued strength in oil prices and commodity markets. Defensive and value-oriented sectors also performed well, including Consumer Staples (+10.98%), Utilities (+10.17%), Health Care (+9.87%), Materials (+8.38%), and Financials (+5.91%). By contrast, several of the market’s largest growth-oriented sectors experienced meaningful weakness. Technology declined 8.26%, Communication Services fell 9.96%, and Consumer Discretionary lost 6.02%, contributing to the underperformance of growth benchmarks.
International equities moved lower during the month. MSCI EAFE declined 0.74%, with both growth and value stocks posting losses. MSCI EAFE Growth fell 1.13%, while MSCI EAFE Value declined 0.36%. Emerging markets experienced more pronounced weakness, with MSCI Emerging Markets declining 8.05%, reflecting pressure across several commodity-sensitive and export-oriented economies. Japan also moved lower, with MSCI Japan declining 4.17% in U.S. dollar terms.
Fixed Income
Fixed income markets rebounded in October as interest-rate volatility moderated following September’s sharp selloff. The Bloomberg U.S. Aggregate Bond Index gained 2.44%, while U.S. Treasuries rose 2.36%, recovering a significant portion of the prior month’s losses.
Most sectors of the bond market participated in the recovery. Investment-grade corporates gained 2.16%, while TIPS rose 2.61%, benefiting from lower real yields and more stable inflation expectations. Mortgage-backed securities also contributed positively, advancing 3.07% during the month.
Municipal bonds were among the strongest-performing fixed income sectors. The Bloomberg Municipal Bond Index gained 3.85%, while high-yield municipal bonds rose 3.54%, as investors returned to longer-duration assets following September’s rate-driven selloff. Short-term Treasury bills continued to provide stable income, gaining 0.36%.
High-yield bonds lagged other segments of fixed income, returning just 0.30%, while emerging-market local-currency debt was essentially flat, gaining 0.05% amid continued weakness across international markets.
Real Assets
Real asset performance was mixed in October. The Bloomberg Commodity Index was essentially unchanged, declining 0.08%, though significant dispersion remained beneath the surface.
Energy continued to be the strongest area of the commodity complex. The Bloomberg Energy Sub-Index gained 7.93%, while WTI crude oil surged 15.59%. Unleaded gasoline also advanced 2.88%, supported by continued supply constraints and resilient global demand.
Outside of energy, commodity performance was considerably weaker. Gold declined 6.87%, while the broader precious metals complex fell 8.70% as higher real interest rates weighed on investor demand. Agricultural commodities declined 5.34%, livestock fell 4.57%, and industrial metals lost 1.69%. Natural gas declined 9.00%, continuing its challenging year.
Real estate-related assets were a notable exception. The FTSE Nareit All Equity REITs Index gained 4.72%, benefiting from the stabilization in interest rates and improving sentiment toward income-oriented investments.
Macroeconomics & Policy
Economic data released during October continued to suggest a resilient, though uneven, economic backdrop. Consumer spending remained stable, labor market conditions generally held firm, and corporate earnings continued to support many areas of the market. At the same time, investors remained focused on the implications of higher interest rates, elevated commodity prices, and the potential impact on economic growth moving forward.
Following September’s rate increase, interest-rate volatility moderated notably during October. Treasury yields stabilized and retraced a portion of the prior month’s move higher, providing relief to fixed income markets and several interest-rate-sensitive asset classes. The resulting improvement in bond market performance supported municipal bonds, REITs, and other income-oriented sectors that had experienced significant pressure in September.
By month-end, market leadership remained firmly concentrated in value-oriented equities, defensive sectors, and energy-related assets. While broad market returns were mixed, the continued divergence between value and growth highlighted the importance of sector allocation and valuation discipline in portfolio positioning.
October 2026 Market Review is intended solely to report on various investment views held by Fidelity Deposit & Discount Bank and is distributed for informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. Fidelity Deposit & Discount Bank does not have any obligation to provide revised opinions in the event of changed circumstances. All data is provided by Bloomberg Finance, LP and Morningstar Direct. We believe the information provided here is reliable but should not be assumed to be accurate or complete. Data, if not otherwise noted, is as of 10/312026. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Past performance is no guarantee of future results. All investment strategies and investments involve risk of loss and nothing within this report should be construed as a guarantee of any specific outcome or profit. Investors should make their own investment decisions based on their specific investment objectives and financial circumstances and are encouraged to seek professional advice before making any decisions. Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index.