Tuesday, October 27, 2026
Stocks Rebound as Fed Meeting Begins With Oil Still Above $100
Key Indicators
S&P 500 (Mon close)
7,676.77
+0.70% (up)Nasdaq Composite (Mon close)
26,169.38
+0.82% (up)Dow Jones Industrial Average (Mon close)
52,361.58
+0.28% (up)VIX
18.39
-5.45% (down)WTI Crude Oil
$101.11
-2.09% (down)Market Recap
Monday's close: S&P 500 gains 0.7% as stocks recover Friday's losses
U.S. stocks rose on Monday, October 26, the last completed session. The S&P 500 gained 0.70% to 7,676.77, the Nasdaq Composite rose 0.82% to 26,169.38, and the Dow Jones Industrial Average added 0.28% to 52,361.58. The bounce recovered most of Friday's losses, when the Dow fell 1.23% and the S&P 500 fell 0.52%. The VIX, Wall Street's fear gauge, fell 5.45% to 18.39. U.S. markets are open today, Tuesday, October 27.
Oil stays above $100 and the 10-year yield sits near 5%
WTI crude settled at $101.11 a barrel on Monday, down 2.09% on the day but still above $100, where U.S.-Iran tensions have kept it. The 10-year Treasury yield was about 4.99%, a level that keeps pressure on stock valuations. Elsewhere, Surgery Partners jumped 47.62% to $23.25 and Range Resources rose 17.66% to $53.56, while Brazilian payments firms XP Inc. fell 48.36% to $15.705 and PagSeguro fell 25.17% to $8.56. The reasons for those individual moves were not confirmed in the sources checked.
Fed meeting begins today with a decision due Wednesday
The FOMC meets October 27-28, with its rate decision due Wednesday at 2:00 PM ET. Investors expect no change in rates and will focus on whether the Fed signals a possible hike in December with oil above $100. Thursday brings the advance Q3 GDP estimate and September personal income and outlays, which includes PCE inflation, both at 8:30 AM ET.
Concept of the Day
Equity Risk Premium
The equity risk premium (ERP) is the extra return investors demand for holding stocks instead of a risk-free asset such as a Treasury bond. A simple way to estimate it is to take the stock market's expected return, or its earnings yield (earnings divided by price), and subtract the risk-free yield. A higher premium means stocks look cheap relative to bonds; a lower one means investors are paid little for taking equity risk. The premium moves when either side changes. If Treasury yields rise while stock prices and earnings stay put, the premium shrinks, so stocks have to fall, earnings have to rise, or investors must accept less compensation. This is why rising yields tend to pressure high-valuation stocks first: their cash flows are further in the future and are discounted at a higher rate. The ERP is not directly observable. Analysts estimate it using different methods, so treat any single number as a rough guide to relative value rather than a timing signal.
Why it matters
With the 10-year Treasury yield around 4.99%, the risk-free alternative is paying close to 5%, which narrows the premium stocks offer. Monday's 0.70% S&P 500 gain came with that yield near its recent highs, so equities are leaning on earnings growth to justify prices. A Fed signal on Wednesday that rate hikes could return would push yields higher and squeeze the premium further.
What to Watch
Wed, Oct 28
FOMC rate decision (Oct 27-28 meeting)
The Fed is expected to hold rates, so investors will parse the statement for hints of a December hike with oil above $100.
Thu, Oct 29
GDP (Advance Estimate), 3rd Quarter 2026
The first read on Q3 growth shows how the economy fared before the oil spike fully feeds through.
Thu, Oct 29
Personal Income and Outlays, September 2026
This report carries the PCE inflation data the Fed watches most closely, landing a day after its decision.