Investment Week at a Glance

Stocks finished down last week. The Dow Jones Industrial Average was down 1.4%, the S&P 500 was down 3.1%, and the NASDAQ was down 4.0%. Foreign stocks (MSCI EAFE) were down 1.9% for the week. Bond prices were up for the week, with the 10-year U.S. Treasury yield ending the week at 4.86%. (Data source: Wall Street Journal)

Midterm Election Results Spark Significant Volatility as Democrats Take Control of Congress

On Tuesday, November 3rd, Democrats secured both chambers of Congress by a wide margin in the midterm elections, creating a divided government for the remainder of Donald Trump’s presidency. Equity markets initially reacted positively on Wednesday as the Dow Jones rose over 1,500 points, but the rally was short-lived. On Thursday, concerns over increased artificial intelligence regulation drove a sharp market selloff, wiping out over $3 trillion in market cap from the S&P 500, the biggest loss in a single trading session ever (Yahoo Finance). The CBOE Volatility Index (VIX), also known as the fear gauge, surged to over 28 as investors assessed both political and economic uncertainty. Nevertheless, despite heightened short-term volatility, corporate earnings, macroeconomic growth, and interest rates will likely remain the drivers of long-term equity performance (Reuters).

October Inflation Report Set to Provide Key Insight into Persistent Price Pressures

Looking ahead to this week, the Bureau of Labor Statistics is set to release both the Consumer Price Index (CPI) and Producer Price Index (PPI) on Tuesday and Friday, respectively. These two measures of inflation will provide investors with insights into inflationary pressure in the US economy from the consumer and producer perspective. In September, inflation accelerated to 3.7% (CPI), well above the Federal Reserve’s 2% target level. Economists and policymakers will be closely monitoring this report, particularly in areas such as housing, energy, and consumer goods, to determine if another interest rate hike in December is appropriate (Bureau of Labor Statistics). 

Costco Stock Up 23% in 2026, As Positive Outlook and Earnings Growth Impress Investors

Costco (COST), one of America’s largest retailers, stock is up 23% this year, significantly outperforming the broader market. Costco reported revenue of $95.7 billion in its latest earnings report, as well as a $3 billion net income; both numbers grew considerably from the same quarter last year (COST Investor Relations). Management provided a positive outlook for increased memberships as its competitive pricing remains attractive to consumers amidst the current inflationary pressures. While investors continue to navigate uncertainty in the technology sector, defensive consumer staples such as Costco may benefit from its more stable business model (CNBC). 

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Quiz

What does the CBOE Volatility Index (VIX) Primarily Measure? (Scroll Down for Answer)

1.     Volatility in Trading Volume Across the US Markets
2.     Expected 30 Day Volatility of the S&P 500 Index
3.     Historical Volatility of the Dow Jones Industrial Average
4.     Volatility of Bond Yields measured by the 10-year Treasury Note

Answer:

2.  Expected 30 Day Volatility of the S&P 500 Index. The VIX, commonly referred to as Wall Street’s fear gauge, measures the market’s expectations for volatility in the S&P 500 over the next 30 days. The index is calculated from options prices, with higher readings generally indicating greater uncertainty and expectations of larger market swings. During periods of political or economic uncertainty such as elections, times of war, or upcoming interest rate decisions, the VIX often rises as investors seek protection against market declines. However, the VIX measures expected volatility, not whether the market will actually fall or rise (CBOE Global Markets).

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