Stock Market Outlook 10/2026: Will High U.S. Interest Rates Become a Burden?

October 7, 2026

What has been the focus in recent weeks

In September, the markets were caught between the ongoing euphoria surrounding artificial intelligence (AI) and concerns about the Middle East conflict. Technology stocks provided support for parts of the stock markets, while numerous other major stock indices—including the Swiss market—declined.

Concerns about excessive concentration of investment in the AI sector had triggered significant price declines in July. These concerns have since subsided, and technology stocks have largely recovered. Several semiconductor manufacturers reported record results, providing an additional boost to the technology sector. At the same time, inflows from foreign investors into the U.S. technology sector, in particular, increased significantly last month. Higher energy prices and uncertainty about future monetary policy kept yields on major government bonds under upward pressure and weighed on their prices accordingly. The yield on 10-year U.S. Treasury bonds even exceeded the psychologically important 5% mark. The fact that this did not trigger any major disruptions in the stock markets underscores investors' continued high confidence in the overall strong economic and corporate data. The U.S. economy, in particular, remains robust, and private consumption—which is so crucial—also remains at a high level. Meanwhile, the U.S. Federal Reserve (Fed) raised its benchmark interest rate, thereby underscoring its determination to continue fighting inflation. The Swiss National Bank (SNB) left interest rates unchanged despite slightly higher inflation.

September has thus once again demonstrated just how crucial the U.S. remains to global market sentiment—with its strong economic data, high levels of AI investment, monetary policy decisions, and, not least, the importance of the U.S. dollar.

Our investment solutions and positioning

Our multi-asset solutions posted a slight decline last month. Global technology stocks and high-dividend companies provided particular support. However, the overall performance was weighed down by the weaker Swiss stock market and gold. To tailor the portfolio specifically to the dynamic market environment, we slightly increased our exposure to the U.S. technology sector. In return, we reduced our holdings in financial stocks to further enhance the portfolio's growth potential.

In our Cross-Asset Fund Navigator , we consistently continued actively rebalancing the portfolio in September and ended the month with a slight loss. In doing so, we took profits on selected technology stocks that had previously performed particularly well. At the same time, we selectively allocated capital to sectors where recent price declines had created attractive opportunities amid fundamentals that remained strong. This disciplined approach is a central component of our investment philosophy: actively managing risks and continuously and flexibly adjusting the portfolio to systematically capitalize on attractive opportunities across different market phases.

The Equity Strategy Global Equity Trends posted gains once again in September. Stocks in the technology sector and value stocks, in particular, provided strong positive momentum. In contrast, companies in the raw materials and commodities sectors, as well as the financial sector, experienced temporary setbacks. As part of our monthly adjustments, we completely divested our positions in the industrial and small-cap sectors. The liquidity freed up as a result was strategically reinvested in global growth stocks and companies in the communications sector to take full advantage of current market dynamics.

Our Equity Strategy Swiss Equity Selection operated last month in a challenging environment for large Swiss companies. UBS and Novartis, in particular, weighed on the overall performance. By contrast, shares in Luzerner Kantonalbank and the Sandoz Group provided positive highlights. To further enhance the portfolio's defensive qualities and earnings strength, we increased our positions in Zurich Insurance and Sandoz. Conversely, we reduced our weighting in the luxury goods group Richemont, as short-term visibility in the Asian market remains limited.

Our Equity Strategy Global Equity Selection posted a strong performance in September. This was driven in particular by strong gains in technology and semiconductor stocks such as ASML, Meta, and Apple. Luxury stocks such as Hermès and commodity stocks, on the other hand, underperformed; however, the portfolio's broad diversification helped mitigate these losses. To further strengthen the portfolio in the growth and technology sectors, we established new positions in SanDisk, Meta, Micron, and Comfort Systems. In return, we sold our holdings in Hermès, ResMed, and Fastenal. In doing so, we are consistently aligning our positioning with companies that demonstrate stronger fundamental momentum.

What next? And what needs to be considered?

Interest rates remain the focus of the markets. The question of whether the U.S. Federal Reserve (Fed) will raise interest rates again at the end of October will be particularly intriguing. Market participants' expectations on this front are currently shifting rapidly. One thing is certain: with the midterm elections coming up in early November, the U.S. government will do everything in its power to prevent a further rise in inflation—and gasoline prices in particular. This could give the Fed additional leeway to hold off on further interest rate hikes for the time being.

There is also great anticipation surrounding the quarterly reports from so-called AI stocks—that is, the companies at the heart of this structural shift.

'We expect AI to remain a structural market driver, with an increasing number of companies benefiting from it.'

Against this backdrop, we remain fundamentally optimistic about the stock markets. At the same time, it is important to keep a close eye on interest rate trends. Should interest rates continue to rise, they could increasingly become a drag on the stock markets.

The key question, therefore, is: When does this level become critical?

As long as corporate earnings grow faster than rising interest rates can weigh on valuations, stocks can continue to rise. This has been particularly true recently for technology and energy stocks. The situation becomes more critical when prolonged monetary tightening coincides with weaker economic growth and declining earnings expectations. Historically, such a combination has often been accompanied by price declines. Highly indebted companies are particularly vulnerable in such an environment. This makes it all the more important to consistently focus on quality—a principle that has always been central to our stock selection process.

Point Capital Group
October 7, 2026

Our experts: Jules Kappeler (CEO) & Christian Sutter (Portfolio Manager)