As the leaves begin to turn and we head into the final stretch of 2026, there is plenty to talk about.
The third quarter was a tale of two markets. On the surface, stocks held up well. The S&P 500
finished the quarter up roughly 2% and the Nasdaq about 2.5%, both within striking distance of
their all-time highs. Tech and AI companies led the way. Financials, Utilities and Consumer
Discretionary sectors did not fare as well. The Dow slipped about 2.7%, small-cap stocks (Russell
2000) fell more than 7%, and roughly three out of four S&P 500 stocks declined in September. A
handful of very large companies can make the headline index look calmer than most stocks
experienced, which is why we keep your portfolios diversified.
The war in Iran has not gone away. The June ceasefire fell apart in early July after attacks on
ships near the Strait of Hormuz. Crude oil climbed nearly 30% over the quarter to roughly $90 a
barrel, feeding inflation that remains stubbornly above 3%. Our playbook has not changed: we
invest for the long term, we do not trade on the headlines, and we make sure no single event
can derail your plan.
The biggest story of the quarter was interest rates. In September, new Fed Chair Kevin Warsh
and the Federal Reserve raised rates for the first time since 2023, to a target range of 3.75%-4.00%.
The 10-year Treasury yield rose to roughly 5.3%, its highest level in about two decades, and
the broad U.S. bond indexes lost 3.5% for the quarter. The silver lining is that new bonds now pay
yields that we have not seen in years.
The economy sent mixed signals. Growth has held up as second-quarter GDP was revised up to
2.2%. August brought a strong 162,000 new jobs, but September slowed sharply to just 29,000, with
unemployment ticking up to 4.2%. We expect volatility around each new data release.
Sports fans had a summer to remember, with Spain winning the World Cup and the Knicks
capturing their first NBA title since 1973.
The Emmy’s featured Mariska Hargitay as host. Matthew Rhys made history as the first actor
to win two leading acting categories in the same years Widow’s Bay dominated, winning 6 statues.
Noah Wyle in the Pitt and Jean Smart in Hacks returned as winners.
Our conviction in American business and technology companies remains intact. The build-out
of data centers, chips, power, and hardware is showing up in real jobs and real earnings.
Here is what we are watching heading into the fourth quarter:
● The Fed: Whether it hikes again, and how Chair Warsh communicates the path forward.
● Oil and inflation: Developments in Iran, and whether long-term yields calm down.
● The November midterm elections: Added volatility is likely as voters head to the polls.
● Required Minimum Distributions (RMD’s): We intend to have these out to you in
November.
Our mantra remains the same. When markets are rattled by rising rates, rising oil, and rising
headlines, we try to stay disciplined, and diversified.
Thank you, as always, for your continued confidence and trust in Pacific Sun Financial. Our
growth remains entirely organic; built on the relationships we share with you. If you have had any
major life changes, or just want to review your long-term plan, please reach out to schedule a
session.
Wishing you and your family a safe, happy, and healthy fall and holiday season!
Mitch Fisher & Ryan Fisher
Pacific Sun Financial Corp
Phone: (949) 716-8646 Fax: (949) 716-8645 Website: www.pacsunfinancial.com
Pacific Sun Financial Corp (PSFC) is a Registered Investment Advisor with the SEC. PSFC provides fundamental
investment management services. The views expressed may contain certain forward-looking statements. PSFC believes
these forward-looking statements to be reasonable, although they are forecasts, and actual results may be meaningfully
different. Actual events may cause adjustments in portfolio management strategies. This material represents an
assessment of the markets at a particular time and is not a guarantee of future results. This information should not be
relied upon as research or investment advice regarding any security. Index performance returns do not reflect any
management fees, transaction cost or expenses. Indices are unmanaged. The S&P 500 Index is an unmanaged index
of 500 common stocks chosen to reflect the industries in the US economy. Investment Advisory Services are offered
through Pacific Sun Financial Corp, an SEC Registered Advisor. The Dow Jones Industrial Average is an
unmanaged index of 30 large U.S. companies. The Nasdaq Composite is an unmanaged index of stocks listed on the
Nasdaq exchange. The Russell 2000 Index is an unmanaged index of small-cap U.S. companies. The Bloomberg
U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade bonds. One cannot invest directly in an
index. Past performance is not indicative of future results.