October was a month of recalibration rather than a broad market pullback. Investors grew more cautious about the enormous cost of artificial intelligence investment, putting pressure on technology stocks, while inflation moved higher. At the same time, the economy continued to expand, although the pace of hiring slowed considerably.

For retirees, pre-retirees, and wealth-building families across New Hampshire and New England, periods like this are a useful reminder that market headlines should be considered within the context of a long-term financial plan. Here is a look at how key market measures performed during October.

Major U.S. Stock Indexes

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

Questions Grow Around AI Investment Returns

Artificial intelligence remained an important factor in October’s market activity, but investor attention shifted from the opportunity to the cost. Alphabet and Amazon both reported earnings below expectations, and Amazon’s third-quarter spending on data centers and equipment was approximately $20 billion higher than forecasts.

Many of the largest technology companies maintained their capital-spending plans or made only modest reductions. That left investors weighing a central question: when will the substantial investments supporting AI translate into meaningful returns?

Profits Remained Strong, but Upside Was Limited

Corporate earnings were generally healthy. At the point when 60% of S&P 500 companies had reported results, 82% had exceeded earnings estimates. That result was above the five-year average, and every one of the 11 market sectors posted year-over-year profit growth.

Still, the size of those earnings beats was relatively modest. In aggregate, reported earnings came in just 1.9% above forecasts, well below historical averages. The distinction matters because markets often respond not only to whether companies beat expectations, but also to the degree of the surprise.

Economic Growth Continued as Households Felt Pressure

The economy expanded at a 3.4% annualized rate during the third quarter. Consumer spending and investment connected to AI helped support that growth, reinforcing the view that the broader economy remained resilient despite uneven conditions in certain areas.

However, the labor market showed signs of slowing. 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, keeping affordability concerns front and center for many households.

At its October meeting, the Federal Reserve left interest rates unchanged following September’s increase. Two officials supported another rate hike, however, and markets largely anticipated an additional increase in December.

What to Watch in November

November may help clarify whether October’s technology-stock decline remains concentrated among a limited number of companies or becomes more widespread. Investors will also be watching company guidance and technology earnings for signs of how well consumers are holding up and whether AI-related spending is beginning to produce results.

October’s employment and inflation reports, released during November, will be particularly important as the Federal Reserve approaches its December interest-rate decision. For households planning for retirement in New Hampshire, changes in inflation and rates can affect spending assumptions, retirement income planning, and the role investments play in a broader financial strategy.

Midterm elections also remain in focus. Elections can create short-term market uncertainty, although extended periods of volatility are more commonly tied to broader economic conditions rather than election results alone.

At F3 Capital, we believe a disciplined, fiduciary approach to financial planning can help keep short-term developments in perspective. As an independent financial advisor in Portsmouth, New Hampshire, we continue to monitor conditions while keeping clients’ long-term goals at the center of the conversation. If you would like to discuss how current markets may relate to your retirement, investment, or tax-planning strategy, please reach out to our team.