A Lot Is Happening in the Markets. Here's What Really Matters

From elections and artificial intelligence to interest rates and bonds, a closer look at today's market developments—and what they mean for long-term investors.

There is certainly no shortage of developments competing for investors' attention these days. Between the midterm elections, uncertainty surrounding interest rates, growing concerns about government debt, and the enormous investments being made in artificial intelligence (AI), financial markets have plenty to digest.

With so many moving parts, it's understandable that investors might wonder what all of this means for their portfolios and long-term financial plans.

Recent market commentary from Charles Schwab offers a fairly balanced perspective. While there are legitimate economic and investment risks worth watching, there are also encouraging developments that may be getting overlooked amid the headlines.

Rather than trying to predict where markets are headed next, let's explore several important themes and what they might mean for long-term investors.

Elections Matter, But Economic Fundamentals Matter More

Election results often generate strong emotional reactions, particularly when the country is politically divided. Investors naturally wonder whether a change in political leadership will help or hurt the economy and financial markets.

Historically, the stock market has performed surprisingly well following midterm elections. According to Schwab, the S&P 500 has generated positive returns during the six months following every midterm election since 1974, averaging approximately 12%.

While encouraging, these historical results should not be interpreted as a forecast.

Schwab's strategists emphasized that today's economic environment presents challenges extending well beyond politics. Inflation, interest rates, corporate profitability, and growing federal debt are likely to have a greater influence on markets over time than which party controls Congress.

One particular concern is the government's ability to address persistent budget deficits. Rising federal debt can put upward pressure on borrowing costs, potentially affecting everything from mortgage rates to business investment. Another debt ceiling confrontation in 2027 could also create uncertainty.

The important distinction is between political developments that generate headlines and economic policies that ultimately affect corporate earnings, consumer spending, and investment returns.

Putting It in Perspective: Making investment decisions based on election outcomes is rarely productive. A diversified portfolio should be designed to withstand a variety of political and economic environments rather than depend on a particular party's policies.

Artificial Intelligence: Innovation Comes With Investment Risk

Artificial intelligence continues to be one of the most influential forces shaping financial markets. Its potential to improve productivity, reduce costs, and transform entire industries is substantial.

However, Schwab's strategists raised an important question: Will the enormous amounts being invested in AI eventually produce enough profits to justify the spending?

Major technology companies are committing hundreds of billions of dollars to data centers, computing equipment, and supporting infrastructure. Increasingly, some are relying on borrowing or issuing additional shares to finance these investments.

That introduces an important financial consideration. Companies are spending enormous sums today in anticipation of profits that may not materialize for several years. Meanwhile, AI technology is advancing so quickly that the competitive landscape could change dramatically before those investments pay off.

There are also practical constraints. Data centers require tremendous amounts of electricity, and concerns about energy costs, water consumption, and infrastructure capacity could delay expansion.

None of this means AI is destined to disappoint. The technology may ultimately deliver substantial economic benefits. However, as with previous technological revolutions, the companies building the infrastructure may not necessarily be the companies that generate the greatest long-term profits.

Putting It in Perspective: Investors can benefit from AI's growth without concentrating their portfolios in a handful of technology companies. Broadly diversified stock mutual funds and ETFs provide exposure to innovation while spreading investment risk across many businesses and industries.

A Broader Stock Market Could Be a Healthier Stock Market

Another encouraging development highlighted by Schwab was the recent improvement in market participation.

For much of the recent market rally, a relatively small group of large technology companies accounted for a disproportionate share of the S&P 500's performance. This created concentration risk, even for investors holding funds designed to track the broader market.

Recently, however, other sectors—including industrials, financial services, energy, and selected healthcare companies—have shown stronger performance.

Schwab noted that approximately 75% of S&P 500 companies had outperformed the index over the preceding month, compared with only 17% a few weeks earlier.

This is significant because a market supported by a broader range of companies and industries is generally less dependent on the fortunes of a few dominant businesses.

It also highlights an important distinction: Owning an S&P 500 index fund does not necessarily mean an investor is equally diversified across all 500 companies. Larger companies carry greater weight in the index, meaning their performance can have an outsized influence on overall returns.

For this reason, diversification across smaller companies, international markets, and different investment styles can complement a portfolio's exposure to large U.S. companies.

Bonds Are Once Again Providing Meaningful Income

For investors approaching or already in retirement, the bond market offers another encouraging development.

According to Schwab, the broad investment-grade U.S. bond market was yielding approximately 5.2% at the time of its November market discussion, near its highest levels in roughly two decades.

This is particularly relevant for retirees who rely on their portfolios to generate income. Higher bond yields can provide more predictable cash flow while potentially reducing the need to sell stocks during market downturns.

However, higher yields do not eliminate investment risk.

Longer-term bonds generally experience greater price fluctuations when interest rates change. Lower-quality corporate bonds may offer higher income, but investors assume additional risk that the issuing company could experience financial difficulties.

Schwab suggested that investors do not necessarily need to extend into very long maturities or lower-quality bonds to earn attractive income.

A diversified portfolio of high-quality bonds with varying maturities can help balance income, stability, and flexibility. Municipal bonds may also be attractive for investors in higher tax brackets because of their potential federal and state income tax advantages.

For retirees, the goal should not simply be to maximize yield, but to generate dependable income while managing risk.

The Bigger Picture: Staying Disciplined in a Changing Market

If there is one consistent message throughout Schwab's market commentary, it's the importance of maintaining investment discipline.

The economy will continue to evolve. Political leadership will change. Interest rates will fluctuate, and technological innovation will create both winners and losers.

None of these developments changes the fundamental principles of successful long-term investing.

A thoughtful investment strategy should balance growth opportunities with the need for stability, maintain appropriate diversification, and account for when money will be needed.

Periodic portfolio rebalancing is equally important, particularly when certain investments have performed significantly better than others. Rebalancing helps prevent a portfolio from becoming more concentrated or taking greater risk than originally intended.

Ultimately, successful investing is less about predicting the next market movement and more about making sound decisions consistently over time.

Markets will always give us something to worry about. The objective is not to eliminate uncertainty, but to build a financial plan that can accommodate it.

And that remains the foundation of my approach to financial planning: helping clients make thoughtful, informed decisions that keep their investments aligned with the lives they want to lead.

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Source: Charles Schwab Market Talk, November 3, 2026. Market observations and forecasts reflect conditions and opinions at the time of the discussion. Past performance does not guarantee future results.

Disclosure: The information presented is based on sources believed to be reliable and is provided by Attune Financial Planning for general educational and informational purposes only. It is not intended as personalized financial, investment, tax, or legal advice. Please consult with your financial, tax, or estate planning professional regarding your individual circumstances before making financial decisions.