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Stock Volatility, Less New Homes, and Maiori

Writer: Doug MacGray
Doug MacGray
Oct 25
4 min read

October 25, 2026


MORE VOLATILITY: Investors remain focused on inflation and whether AI companies can maintain strong earnings and profits while spending a lot of money. Will the spending that AI companies need to sustain be too much? Will inflation persist with the Middle East conflict persisting? With all the worries and volatility, stocks ended down. The S&P was down less than half a percent, and the NASDAQ Composite was down by 0.7%. Meta (Facebook) was down 9.4% for the week after announcing better-than-expected earnings. Investors were concerned about the sustainability of Meta's spending. International stocks did worse. However, yields on Treasuries dropped. The ten-year Treasury dropped by about 0.11%, causing bonds to rally. Small cap stocks, which are more sensitive to interest rates, rebounded strongly. The Russell 2000 was up 2.0%. So when investors were selling their large-cap tech stocks last week, evidently they were buying small-cap stocks.


LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.



EARNINGS STILL EXCEEDING EXPECTATIONS: Of the 121 companies in the S&P 500 that have reported their third-quarter earnings, 83% have exceeded Wall Street expectations. The historical average is 68%. In the last four quarters, this figure has been at 82%.


NEW HOME CONSTRUCTION: Construction of new homes has been on a downward trend since the Fed began its tightening cycle in March of 2022. Last month, new home building data continued to disappoint. Housing starts fell 5.2% from the prior month to a 1.221 million annual rate, the second lowest rate since the COVID shutdowns. Single-family home starts fell 4.6% and multi-family home starts fell 6.7%. Mortgage rates are making homes less affordable, and thus harder to sell, and immigration enforcement is reducing the amount of housing needed in the U.S., further slowing new home activity. Immigration policy is also making it more difficult for builders to get all the workers they need. Homebuilding is getting hit the hardest by the Fed's efforts to fight inflation due to its sensitivity to interest rates.


INVESTOR SENTIMENT: According to the American Association of Individual Investors (AAII) most recent survey, 36.9% of investors are bullish for the U.S. markets over the next six months. 45.8% are bearish. The rest are neutral. Since AAII has been doing this survey, the averages have been 37.5% bullish, 31.0% neutral, and 31.5% bearish.


U.K. INFLATION: Inflation in the United Kingdom rose from 3.1% (annual rate) to 3.5% last month, strengthening the case for the Bank of England to raise rates soon, the first since the onset of the Iran war. The Bank of England's key rate is currently 3.75%.


A LOT OF MARKET-MOVING DATA THIS COMING WEEK: This coming week, the Fed will meet. Will it raise its key interest rate? The Personal Consumption Expenditure (PCE) measurement of inflation will be announced next week. The U.S. gross domestic product for the last quarter will be announced.


WHERE'S DOUG?: I am on my way back now, but we spent the last week plus on the Amalfi Coast. This was a new place for us. I researched this for about a year, so I learned a lot about the do's and don'ts of such a trip. We stayed in a small town known as Maiori and took boat trips to the other places we wanted to see (Capri, Amalfi, Positano, Ravello, Vietri Sul Mare). We made our own pasta, walked the "path of the lemons (a lot of steps), and took a tour of Pompeii (absolutely fascinating). We had a wonderful time. And yes, I was sporting my Panama hat during this trip.



Have a great week!


Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.



Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545




"Life takes its own turns, makes its own demands, writes its own story, and along the way, we start to realize we are not the author." George W. Bush*


"Two are better than one, because they have a good return for their labor." Ecclesiastes 4:9


*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 43rd week, and George W. Bush was our 43rd president.


SOURCES:


© 2026 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it is a common index to track the performance of U.S. equity markets, especially the large cap markets.


*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.


*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


The information contained herein has been compiled from third-party sources (see above) and is believed to be reliable; however, its accuracy is not guaranteed. This newsletter is not an offer or a solicitation to buy or sell securities, and you should not construe it as investment, tax, or legal advice, or a specific investment recommendation. Any opinion included in this newsletter is our judgment as of the date of this report and is subject to change without notice.


If you want any additional information regarding Stonecrop Wealth Advisors, including management fees and expenses, you can contact us directly, or review our Form ADV Part 2 which can be found here (www.adviserinfo.sec.gov), or which we will be happy to provide to you upon request. Only God knows the future, and so while past performance can be helpful information, it is not a guarantee of future performance which could be completely different.


SDG

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