US Stock Market predictions for Quarter 4: November midterm elections 2026, list of factors, concerns that will drive Wall Street investors, S&P 500, Nasdaq in final quarter

Wall Street indexes have closed highly volatile third quarter as investors will look for a blooming final quarter. In September, the S&P 500 and MSCI All Country World index were at their peaks, while the tech-heavy Nasdaq traded at a new high of 27,288 points just last week, Reuters reported.

However, there is a worrying factor beneath the glittering statistics. The S&P 500 rose only 2 per cent. Around 40 per cent of S&P 500 stocks are down for the year, and a quarter of the index's constituents have fallen 10 per cent or more, according to Ben Carlson at Ritholtz Wealth Management, according to Wall Street expert Jamie McGeever.

Strategists at Goldman Sachs reckon market breadth is the narrowest since 2000. A handful of tech giants are boosting an otherwise middling market, with AI increasingly the only game in town. More than half of the S&P 500's market capitalization is now composed of AI or AI-adjacent companies, Reuters reported.


However, as the journey begins for the final quarter of 2026, experts' predictions for AI- and tech-infused earnings growth remain lofty, but, as the third quarter showed, many of the obstacles in Wall Street's path are just getting bigger, U.S. Stock Market expert McGeever said.

U.S. Stock Market Predictions

Looking forward, the hawkish rate outlook in the US remains a major headwind. While current market pricing puts the likelihood of an October hike at roughly 50 per cent, the bond market is indicating the Fed has more work to do. Will the Fed's next step be later this month, just days before the US midterm elections, or in December?

Ultimately, it will be difficult for the fourth quarter to match the drama of the last three months, but investors should brace themselves. On top of more expected interest rate rises in the US and around the world, worries about AI's threats to financial stability, the long-term employment outlook and human existence itself are unlikely to fade quickly. The US-Iran war is still raging, too.

Can equities shrug all that off again? Investors may get an answer as the third-quarter earnings season kicks into gear in the next few weeks.

However, there are a few areas of concerns going forward.

The most glaring concern is the cost of capital, which is rising – rapidly. The 10-year US Treasury yield, still the world's benchmark borrowing cost against which trillions of dollars of loans are referenced globally, rose more than 85 basis points in the quarter. That's one of its biggest quarterly rises in the last 50 years. Yields across most of the US Treasury curve are at their highest levels since the mid-2000s, and it's a similar story in Europe and Japan, according to McGeever.

This reflects a major hawkish shift in global interest rate expectations on the back of rising price pressures. The Federal Reserve, under the stewardship of new Chair Kevin Warsh, raised rates in September for the first time in three years.

Sovereign bonds are being hit from all sides. Energy supply shocks stemming from the US-Iran and Russia-Ukraine wars are stoking inflation fears. Then there’s the pressure on governments to ramp up spending on defense, energy security and AI infrastructure, despite their precarious fiscal positions.