Tech Stocks Stumble, Canada Raises Rates and U.S. Midterms Take Centre Stage
Week Ending October 30, 2026
Hello everyone!
You may have noticed there wasn't a market update from me last week.
I was away in Montreal attending our National Business Conference, where we had the opportunity to hear from a number of speakers and economists about the markets, interest rates, artificial intelligence and the broader economic outlook.
There was certainly a lot to take in, and the timing couldn't have been better because markets gave us plenty to talk about while I was away.
Last week started on a fairly optimistic note, but that changed rather quickly.
Technology stocks came under pressure as investors digested mixed corporate earnings, the Federal Reserve left interest rates unchanged, the Bank of Canada moved in the opposite direction and raised rates, and new economic data continued to show a surprisingly resilient U.S. economy.
And if that wasn't enough, Americans head to the polls this Tuesday for the U.S. midterm elections.
So there is a lot going on.
Let's take a closer look at what happened and, more importantly, what it may mean for investors.
Market Overview
Weekly Market Performance
- S&P 500:-0.57%
- Nasdaq Composite:-2.00%
- Dow Jones Industrial Average:-0.85%
- MSCI EAFE Index: +0.85%
- S&P/TSX Composite Index: approximately -0.47%
The Canadian market finished Friday at 35,620.03, compared with 35,788.18 the previous Friday, a decline of approximately 0.47% for the week. Friday itself was much more difficult, with the TSX falling 1.74%.
It was another one of those weeks where the headline numbers didn't tell the whole story.
Technology was once again at the centre of the action.
Investors started the week feeling relatively optimistic about corporate earnings and the continued growth of artificial intelligence. But by Thursday and Friday, that enthusiasm had faded as several major technology companies reported results that didn't quite live up to the very high expectations built into their share prices.
The Nasdaq ended the week down 2%, including a particularly difficult Friday.
Meanwhile, international developed markets moved in the opposite direction, with the MSCI EAFE finishing the week higher.
Once again, we're seeing why diversification matters.
Not every market moves in the same direction at the same time, and that's actually a good thing when you're building a diversified portfolio.
Technology Had Another Reality Check
Artificial intelligence continues to be one of the biggest investment themes in the world.
And I don't think that is changing anytime soon.
Companies continue to spend enormous amounts of money building data centres, buying semiconductors, developing AI models and incorporating this technology into their businesses.
The challenge is that investors have become accustomed to some pretty spectacular results.
At the beginning of last week, enthusiasm around AI helped markets move higher. Investors were also looking forward to one of the busiest stretches of third quarter earnings season.
By Wednesday, the Nasdaq was up more than 2% for the week and the S&P 500 had gained more than 1.5%.
Then the mood changed.
Mixed earnings from some of the largest technology companies raised questions about valuations and whether future growth could justify the prices investors are currently paying.
By Friday, selling accelerated and investors appeared to move toward more defensive areas of the market.
This doesn't mean the AI story is over.
But I think we're reaching a stage where simply being associated with artificial intelligence isn't going to be enough.
Investors increasingly want to see results.
How much money is being spent?
What return are companies getting on that investment?
How quickly can AI spending translate into revenue and profits?
And are today's stock prices already reflecting years of expected growth?
Those are healthy questions for markets to ask.
Great companies can still be expensive investments, particularly when expectations become extremely high.
The U.S. Economy Remains Surprisingly Strong
There was also some important economic news last week.
The U.S. economy grew at an annualized rate of 3.4% in the third quarter, beating expectations of approximately 3.1% and accelerating from 2.2% in the second quarter.
That is a strong number.
On the surface, stronger economic growth is obviously positive.
Consumers are spending, businesses are investing and the economy continues to expand.
But here's where things get interesting.
A strong economy can also make the Federal Reserve's job more complicated.
The Fed left its benchmark interest rate unchanged last Wednesday. Two officials preferred an increase, however, which suggests there is still meaningful concern about inflation.
If economic growth remains strong while inflation also stays elevated, the Fed has less reason to rush toward lower interest rates.
And that matters for markets.
Higher interest rates affect mortgages, borrowing costs, corporate financing and stock market valuations.
Technology and other growth companies can be particularly sensitive because investors are often paying today for profits they expect well into the future.
So good economic news can sometimes create a surprisingly mixed response from markets.
What About Canada?
This was actually one of the most important weeks we've had in Canada for quite some time.
The Bank of Canada raised its policy rate by 0.25 percentage points to 2.50% on Wednesday. The move reflected growing concern about inflation and, in particular, the impact that persistently high energy and import costs could have on consumer prices.
That deserves some attention.
The Bank now expects Canadian inflation to remain above 3% through much of 2027, with higher energy prices and import costs creating additional pressure. At the same time, it upgraded its economic outlook and expects growth of around 2% in both 2027 and 2028.
So why raise rates when parts of the Canadian economy are still struggling?
Because the Bank of Canada is worried today's higher costs could become tomorrow's broader inflation problem.
Energy is a good example.
When gasoline and transportation costs rise, the impact doesn't stop at the gas station.
Businesses pay more to move goods.
Manufacturers pay more for inputs.
Airlines face higher fuel bills.
Retailers face higher shipping costs.
Eventually, some of those costs can make their way into the prices consumers pay.
The Bank estimates Canadian inflation could rise to around 3.5% by the end of this year, with energy prices, non energy imports and trade related costs all playing a role.
At the same time, Canada isn't exactly booming.
Statistics Canada data released Friday showed the economy was essentially flat in August for a second consecutive month.
That leaves the Bank of Canada in a difficult position.
Raise rates too aggressively and you put additional pressure on Canadian households, mortgages and businesses.
Don't do enough and inflation risks becoming harder to control.
I suspect that balance will be one of the biggest Canadian economic stories we'll continue watching over the coming months.
The TSX Held Up Better Than Friday Made It Look
Canadian stocks had a difficult finish to the week.
The S&P/TSX Composite fell 1.74% on Friday alone, closing at 35,620.03. Technology, financials and materials were significant detractors, while energy provided some support.
For the full week, however, the TSX was down only about 0.47%.
That's an important distinction.
If you only looked at Friday, you would think Canadian markets had a terrible week.
Zoom out slightly and the picture looks quite different.
Higher oil prices have provided some support to the energy sector, which is much more important to the Canadian stock market than it is to the major U.S. technology heavy indexes.
Again, that's diversification at work.
The TSX has significant exposure to financials, energy and materials, while the U.S. market has much heavier exposure to large technology companies.
Neither structure is necessarily better.
They simply respond differently depending on what's happening in the economy.
U.S. Midterm Elections Are This Tuesday
There's one more major event investors will be watching this week.
Americans go to the polls on Tuesday, November 3 for their midterm elections.
All 435 seats in the House of Representatives and 35 Senate seats are being contested, meaning the balance of power in Washington could change considerably.
Why does that matter to investors?
Because control of Congress affects how easily the administration can move forward with legislation involving spending, taxes, regulation and other domestic priorities.
If control of one or both chambers changes, the U.S. could move toward a more divided government for the final two years of President Trump's term.
From an investment perspective, I'm much less interested in predicting the election than I am in understanding what it may mean afterward.
Markets may be watching for potential implications for:
- Government spending and fiscal policy
- Taxes
- Trade and tariffs
- Energy policy
- Regulation
- Technology and AI infrastructure
- Canada's trading relationship with the United States
Trade is particularly important from a Canadian perspective.
The Bank of Canada has already identified Canada's trade relationship with the United States as one of the biggest risks to our economic and inflation outlook.
That means Tuesday's election is not simply an American political story. Depending on the outcome and the policies that follow, there could eventually be implications for Canadian businesses, exporters, the Canadian dollar and our economy.
But I would add an important word of caution.
Elections can generate a tremendous amount of noise.
Markets don't vote for political parties.
They react to economic growth, earnings, inflation, interest rates, taxation, regulation and ultimately what policies mean for businesses.
So rather than trying to position portfolios around a particular election result, I'd prefer to see what actually changes after the votes are counted.
What Does This Mean for Investors?
There was a lot packed into one week.
Technology sold off.
The U.S. economy grew faster than expected.
The Federal Reserve held rates steady.
The Bank of Canada raised rates.
Inflation remains a concern.
Canadian economic growth is sending mixed signals.
And now we have a major U.S. election.
It would be very easy to look at all of that and think we need to start making major changes.
I don't think that's the right lesson.
What last week really demonstrated is that different investments respond differently to the same environment.
Higher oil prices can create inflation problems for consumers while simultaneously benefiting energy producers.
Higher interest rates can weigh on highly valued growth stocks while improving potential returns available from certain fixed income investments.
A technology selloff doesn't necessarily mean Canadian energy or international stocks will behave the same way.
And that's exactly why we diversify.
We don't need to predict which asset class will win every week.
We want portfolios capable of participating in long term growth without being dependent on one company, one sector, one country or one particular economic outcome.
What the Week Really Meant
If I had to sum up last week in one word, it would probably be selectivity.
Investors aren't necessarily walking away from stocks.
But they are becoming more selective about what they're willing to pay.
That is particularly evident in technology.
Companies can still have excellent businesses and exciting long term opportunities, but the higher expectations become, the harder it is to keep exceeding them.
At the same time, central banks still haven't won the inflation battle.
The Federal Reserve paused last week while the Bank of Canada raised rates.
Two neighbouring economies, facing some of the same global pressures, are taking different approaches.
That's worth paying attention to.
But none of this changes the basic reason we invest.
Our portfolios aren't built around what happens in one election or where the Nasdaq finishes next Friday.
They're built around retirement.
Income needs.
Family.
Financial security.
And the things we want our money to allow us to do over many years.
Weeks like this are a good reminder that markets will always give us something to worry about.
A good financial plan shouldn't require those worries to disappear.
Looking Ahead
We have another very busy week coming up.
The U.S. midterm elections on Tuesday will receive most of the headlines, but they aren't the only thing markets will be watching.
Corporate earnings remain front and centre.
Apple and Palantir report Monday after the market closes, AMD reports Tuesday, and we will hear from a number of other major companies throughout the week. Shopify is also scheduled to report Tuesday morning, giving us an important Canadian technology story to watch.
We'll also receive important U.S. employment data on Friday.
That report could matter just as much to markets as the election.
If the labour market remains resilient, it could reinforce the idea that the Federal Reserve doesn't need to move quickly toward lower rates. If employment shows more material weakness, markets could reach a very different conclusion.
Here in Canada, I'll continue watching the reaction to the Bank of Canada's rate increase, particularly what it means for borrowing costs, housing, bonds and the Canadian dollar.
And, of course, oil remains important.
Higher oil prices can support Canadian energy companies, but if those higher prices persist, they could also keep inflation elevated and create additional pressure on household budgets.
There will be plenty to talk about next week.
This Week: Key Economic Data
Monday, November 2
- U.S. Manufacturing PMI
- U.S. Construction Spending
Tuesday, November 3
- U.S. Midterm Elections
- U.S. Job Openings and Labor Turnover Survey
- U.S. Factory Orders
Wednesday, November 4
- ADP Private Sector Employment
- U.S. Trade Balance
- U.S. Services PMI
Thursday, November 5
- U.S. Productivity and Costs
- Weekly U.S. Jobless Claims
Friday, November 6
- U.S. Employment Report
- University of Michigan Consumer Sentiment
- U.S. Consumer Credit
The October U.S. employment report is scheduled for Friday at 8:30 a.m. Eastern and will be one of the week's most closely watched economic releases.
This Week: Companies Reporting Earnings
Monday, November 2
- Apple
- Palantir Technologies
- Vertex Pharmaceuticals
- Marriott International
Tuesday, November 3
- Advanced Micro Devices
- Shopify
- Amgen
- Arista Networks
- Pfizer
- Eaton
- Marathon Petroleum
- Booking Holdings
Wednesday, November 4
- Qualcomm
- McDonald's
- Uber Technologies
- CVS Health
- McKesson
- Datadog
Thursday, November 5
- ConocoPhillips
- Canadian Natural Resources
- Cloudflare
- Parker Hannifin
- Southern Company
- Airbnb
- Duke Energy
Friday, November 6
- Enbridge
- Moderna
- Brookfield Asset Management
The earnings calendar is particularly interesting this week because several important Canadian companies are reporting alongside some of the biggest U.S. technology names.
“Things are only impossible until they’re not.”
– Captain Jean-Luc Picard (Patrick Stewart)
You throw it out when you need to use it. You bring it up when you don’t. As you travel, it goes with you. What is it?
Last Week's Riddle: No matter how little or how much you use me, you change your view of me every month. What am I?
Answer: A calendar
This is from a park in Newmarket Ontario. Maybe you could come up with a better way to say this.
Footnotes And Sources
1. WSJ.com, October 30, 2026
2. Investing.com, October 30, 2026
3. CNBC.com, October 27, 2026
4. WSJ.com, October 28, 2026
5. CNBC.com, October 29, 2026
6. CNBC.com, October 30, 2026
7. WSJ.com, October 28, 2026
8. WSJ.com, October 29, 2026
9. Daily Burn, July 21, 2026
10. indisputably.org, July 22, 2026
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