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Here's the summary of our latest PWA Index scoring, followed by your weekly macro roundup*:
Housing Cracks, Oil Climbs, Tech Spending Under Scrutiny*
Week of October 19, 2026
Housing weakened on almost every measure this week. Builder confidence fell to its lowest level in more than fourteen years, permits for new single-family homes declined for a second month, and signed contracts to buy existing homes dropped to a record low. Most of the rest of the economy held up: layoffs stayed near historic lows, a broad gauge of future activity was steady, and factory surveys showed the strongest new orders in more than four years. Markets were driven by two forces. Concern about how much the largest technology companies are spending on artificial intelligence, and how that spending is being financed, pulled technology stocks and long-term interest rates lower. Meanwhile oil rose to its highest level since April as attacks spread to targets inside Saudi Arabia.
The week in brief
- Homebuilder confidence fell to its lowest since 2012, and more than four in ten builders cut prices.
- Single-family building permits fell for a second straight month, and housing starts declined.
- Contracts to buy existing homes fell 7.3% to a record low.
- Average 30-year mortgage rates eased to 7.32% from 7.40%, but mortgage applications still fell.
- Weekly unemployment claims fell to 194,000, a three-month low.
- Business surveys showed strong factory orders but the fastest rise in input costs since 2022.
- The 10-year Treasury yield fell to about 5.00% from 5.09%, after its largest one-day drop since March 2023 on Thursday.
- Odds of a Fed rate increase next week fell below 10%, and odds of a December increase eased to roughly 78%.
- The global oil benchmark rose about 6% to near $117 a barrel; the U.S. benchmark finished just above $103.
- Stocks were mixed: the S&P 500 fell 0.5% and the Nasdaq 0.7%, while small companies rose 2% and energy shares closed at a record.
- Gold fell about 4% and closed below $4,000 for the first time since July.
- Our internal conditions gauge fell to +4.48 from +5.97, still higher than about 91% of the past four years.
- What matters next: the Federal Reserve decision on Wednesday, October 28, and the first estimate of third-quarter growth on Thursday, October 29.
Housing is where higher rates are biting
The National Association of Home Builders' confidence index fell to 29, its lowest since June 2012. Builders reported weaker sales, weaker expectations and fewer prospective buyers, and 43% cut prices, the highest share since 2020. Permits for single-family homes fell 4% in September after declining in August, and single-family starts fell nearly 5%. Pending sales of existing homes dropped 7.3% to the lowest level on record.
Mortgage rates eased slightly this week, but by less than Treasury yields. Lenders have been charging an unusually wide margin over government bonds, so the relief from lower market rates has been slow to reach borrowers. Applications to buy homes are down 18% from a year ago. Monday's report on new-home sales will show whether the weakness extends to that market.
The broader economy held up
Outside housing, the data were steady. Weekly unemployment claims fell to 194,000. The Conference Board's index of leading indicators was unchanged in September, better than the decline economists expected. A survey of purchasing managers showed factory output near its strongest in more than four years, with new orders and manufacturing hiring both rising quickly. The Atlanta Fed's running estimate of third-quarter growth stands at 3.5%.
Consumer sentiment remains near record lows but was revised up from earlier in the month. Households expect prices to rise 4.7% over the next year, unchanged. The same business surveys that showed strong activity also showed costs rising at the fastest pace since 2022, driven by energy, freight and materials. Some service businesses report paying sharply higher prices while raising their own prices only slightly, which squeezes profit margins.
Technology spending became the worry*
For most of this year, heavy investment in artificial intelligence by the largest technology companies has supported both economic growth and the stock market. This week investors focused on the cost. One of the largest platforms reported that its spending on data centers exceeded the cash its business generated in the quarter, for the first time in more than a decade. A major chip-equipment supplier said shortages of factory space and parts would limit its growth into 2027. Specialized cloud-computing companies that borrow heavily to build data centers saw their bond prices fall sharply.
On Thursday the Nasdaq fell 2.6% and semiconductor stocks fell nearly 7%. Corporate bond spreads, the extra yield investors demand over Treasuries, widened to their highest level in 17 months. The 10-year Treasury yield fell 17 basis points that day, its largest one-day decline since March 2023, as investors moved toward safety and weighed the risk of slower growth.
The selling was not limited to technology suppliers. Investors are now questioning companies whose spending is running ahead of their cash flow, and the next test arrives next week when several of the largest technology companies report results.
Interest rates: lower, led by inflation-adjusted yields
Treasury yields fell across maturities. The 10-year finished near 5.00% and the 30-year near 5.31%, while the 2-year eased to about 4.69%. Most of the decline came from lower inflation-adjusted yields rather than lower inflation expectations, a second week in which the bond market priced growth risk more than inflation risk. That held despite weak demand at a 20-year Treasury auction, which sold at the highest yield since 1986.
The Fed: a pause expected next week
Markets now put the odds of a rate increase at the October 28 meeting below 10%, down from about 16% a week ago, and the odds of an increase in December at roughly 78%, down from about 90%. The decision comes six days before the midterm elections; the Fed has rarely changed rates that close to an election. Several analysts expect a pause with some officials favoring an increase.
Oil: attacks reach inside Saudi Arabia
Oil rose for a second week. The global benchmark finished near $117 a barrel, its highest since April, and the U.S. benchmark near $103. Strikes reached oil facilities and other sites inside Saudi Arabia, and Saudi Aramco evacuated its headquarters. Attacks on shipping around the Strait of Hormuz reached their highest monthly count of the conflict. Physical shipping traffic through the strait remains a small fraction of pre-war levels, while more Gulf oil is reaching markets through pipelines and other routes that bypass it. Iran has offered to reopen the strait if the U.S. ends its blockade of Iranian ports; talks continue through intermediaries. Diesel prices rose again.
Stocks: a split market
The S&P 500 fell 0.5% and the Nasdaq 0.7%, while the Dow rose 0.4% and smaller companies gained 2%. Energy stocks closed at a record. Health care, consumer staples, materials and utilities all rose, extending a rotation away from the largest technology companies that is now spreading on actual gains rather than only on technology's decline. Communication services fell more than 4%. Gold and silver fell sharply as some investors sold to meet losses elsewhere and as higher oil prices kept rate-increase expectations alive.
What our internal gauge says
Our internal conditions gauge fell to +4.48 from +5.97, still higher than about 91% of the past four years. It has declined for three straight weeks.
One of the 67 measures changed: single-family housing starts moved to our weakest category after a second consecutive decline in permits. Every other measure held its rating. Several housing measures were already in that category and deteriorated further. On the positive side, sector leadership in the stock market continued to broaden, and this week it came from rising sectors rather than only a falling technology sector.
The gauge continues to read business activity as strong, hiring as stalled, and inflation as firm. This week it added clear evidence that higher rates are weighing on housing, at a time when the rest of the economy is still growing.
What we are watching
Monday, October 26 brings new home sales, and Tuesday, October 27 orders for long-lasting goods and consumer confidence.
Wednesday, October 28 is the Federal Reserve decision, along with results from several of the largest technology companies. Thursday, October 29 brings the first estimate of third-quarter growth and September consumer spending and inflation.
Tuesday, November 3 is Election Day, Wednesday, November 4 brings the Treasury's quarterly borrowing announcement, and Friday, November 6 the October jobs report.
This commentary is provided for informational and educational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation regarding any security, sector, or investment strategy. The views expressed reflect the opinions of Private Wealth Advisors as of the date written and are subject to change without notice. Information has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Past performance is not indicative of future results, and all investing involves risk, including the possible loss of principal. Nothing contained herein should be construed as personalized investment, tax, or legal advice.
*The section titled "Housing Cracks, Oil Climbs, Tech Spending Under Scrutiny" was drafted with the assistance of artificial intelligence tools under the direction and editorial review of Marty Mazorra, Chief Investment Officer of Private Wealth Advisors. All analysis, conclusions, and final content are his own.
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