Oct 5, 2026 · 8 min · 5 segments
This week in the markets: investors are torn between rising bond yields and booming earnings ahead of a nervous autumn of political uncertainty. Fidelity’s Tom Stevenson reviews the stories moving…
The net result of the conflicting pressures has been a market that has risen since the summer, but with flagging momentum.
The recovery from the initial Gulf War shock in the spring has run out of steam.
And within the market, there's a clear divergence between the market's biggest stocks, which have once again picked up the leadership baton, and other companies, which are increasingly starting to feel the pain of higher borrowing costs and uncertain consumers.
The equal weighted S&P 500 index has fallen behind the biggest stocks for three years now.
It's a worrying reminder of how markets can become narrower in terms of leadership as they approach a cyclical peak.
Just 25% of big US stocks are now ahead of their 50-day moving average, and less than half are ahead of their 200-day average.
That's most evident in the market's valuation, which has fallen back below 20 in terms of the multiple of expected earnings.
Investors are indicating clearly that they are increasingly concerned about paying up for profits which may be close to peaking.
That would not be surprising with earnings running 30% ahead of a year ago and with another 20% growth penciled in for the next 12 months.
The net result of the conflicting pressures has been a market that has risen since the summer, but with flagging momentum.
The recovery from the initial Gulf War shock in the spring has run out of steam.
And within the market, there's a clear divergence between the market's biggest stocks, which have once again picked up the leadership baton, and other companies, which are increasingly starting to feel the pain of higher borrowing costs and uncertain consumers.
The equal weighted S&P 500 index has fallen behind the biggest stocks for three years now.
It's a worrying reminder of how markets can become narrower in terms of leadership as they approach a cyclical peak.
Just 25% of big US stocks are now ahead of their 50-day moving average, and less than half are ahead of their 200-day average.
That's most evident in the market's valuation, which has fallen back below 20 in terms of the multiple of expected earnings.
Investors are indicating clearly that they are increasingly concerned about paying up for profits which may be close to peaking.
That would not be surprising with earnings running 30% ahead of a year ago and with another 20% growth penciled in for the next 12 months.
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