October prompted investors to reassess market expectations rather than abandon risk altogether. Concerns about the high cost of artificial intelligence investment weighed on technology stocks, while inflation moved higher. At the same time, economic growth remained firm, even as the pace of hiring slowed.

For investors developing a long-term investment strategy, the month reinforced the importance of looking beyond short-term market swings. Here is a closer look at how key market benchmarks and economic trends performed in October.

Major U.S. Stock Indexes

• The S&P 500 declined 0.93% during the month.
• The Nasdaq 100 fell 6.65%.
• The Dow Jones Industrial Average rose 1.70%.

Questions Surround AI Investment Returns

Technology shares came under pressure as investors examined the scale of spending required to support artificial intelligence initiatives. Alphabet and Amazon both fell short of earnings expectations, while Amazon’s third-quarter expenditures on data centers and equipment exceeded forecasts by roughly $20 billion.

Most major technology companies maintained their planned spending levels or made only modest reductions. That left investors focused on an important question: when will the substantial investment in AI infrastructure begin to produce meaningful returns?

Profits Remained Strong, but Beats Were Modest

Corporate earnings results continued to show broad underlying strength. With 60% of S&P 500 companies reporting, 82% surpassed earnings estimates, exceeding the five-year average. In addition, all 11 market sectors posted year-over-year earnings growth.

Still, the magnitude of those positive surprises was relatively limited. Aggregate earnings outperformed expectations by just 1.9%, which was considerably below historical averages. For portfolio management, this distinction matters: positive earnings growth does not always translate into the level of upside investors have already priced into markets.

Economic Growth Held Up as Households Felt Pressure

The economy expanded at a 3.4% annualized rate in the third quarter, supported by consumer activity and investment tied to artificial intelligence. The growth reading offered evidence that the broader economy remained resilient despite increased concern about inflation and market valuations.

However, the employment picture was less encouraging. September hiring nearly came to a standstill, with only 29,000 jobs created. After accounting for inflation, after-tax income also declined, placing additional strain on household purchasing power and contributing to subdued consumer sentiment.

Inflation Increased While the Fed Paused

Consumer prices increased 3.7% from a year earlier in September. Inflationary pressure was not limited to gasoline; it extended into other areas of the economy as well.

At its October meeting, the Federal Reserve left interest rates unchanged following September’s increase. Two officials supported another hike, however, and market expectations continued to point toward a possible rate increase in December.

What to Watch in November

November may clarify whether October’s technology-stock weakness remains concentrated among a limited number of companies or becomes more widespread. The October employment and inflation reports, both scheduled for release during November, will also be important inputs for the Federal Reserve’s December rate decision.

Investors will be monitoring company guidance and technology earnings for further insight into consumer resilience and whether AI-related spending is beginning to show results. These developments can influence near-term market performance, but they should be evaluated within the context of a disciplined, personalized investment strategy.

With midterm elections drawing attention, investors should also remember that elections can contribute to short-term volatility. More substantial and prolonged market disruptions, however, are often connected to broader economic conditions rather than election results alone.

At Benson Wealth Management, we believe effective wealth management starts with maintaining perspective through changing market conditions. Our team helps individuals and businesses in Ooltewah and across Tennessee align investment decisions, retirement planning, and estate planning considerations with their long-term financial goals. We will continue monitoring these developments and keeping our clients’ financial planning priorities at the center of the conversation. If you would like to discuss what these trends may mean for your portfolio, please contact Benson Wealth Management.