Market Insights Recap — Week of November 2, 2026

Hello, I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.

Well, we thought October would be a bumpy ride. It was, but as always, it never happens the way you expect. Does a spooky October change our portfolio approach or holdings? Let's just wade into the stock swamp first. We discussed the great rotation away from AI stocks for at least the last six weeks, and October will officially go down as Ditch Tech Month. The tech-heavy Nasdaq fell 5.3% last month as traders dumped AI and related names. Google, or Alphabet, if you will, was the poster child, dropping over 11% last Thursday after missing earnings.

Is the AI boom over? Are these stocks going to zero? Hardly. The AI boom has followed a typical path for booms: canals, railroads, telephones, cell phones, dot.com, fiber, they all follow the same trajectory. You have an idea, idea funded by cash or VC, and stock raises, then debt. Finally, debt cannot be repaid by some players. And then there's a bust. Are we going bust? No, but we're in the mid inning, so to speak, of the debt build. So most, if not all, the buyers of AI debt, they're full up on the sector. Think insurance companies, banks, pension funds, they've all had their fill at this point. So as a result, the new issues that are coming to market on this AI-related debt and data centers, they've had to raise their interest rates to entice these buyers to pony up capital. At some point, the debt cost and oversupply of data centers are going to exceed the compute demand, and that's when the debt train will stop. Tech and the AI buildout have years to run. But taking a little off the table appears to be prudent at this point. And that's what October was all about.

Google reported that they had good sales growth, but spent more than they made on building out those data centers. So meanwhile, earnings for the S&P 500, they're growing at 30% year over year. That's great. Taking away the top seven tech names, the old Magnificent Seven, and the other 493 S&P companies, well, there were up 1.3% in October. That's above average for October. More stocks are making new highs than new lows. And the New York Stock Exchange advanced decline line is rising again after a brief swoon in September. So behind the headlines, stocks are doing fine.

We expect a mild rally after midterms, and oh are we thankful midterms are here. My cell phone needs a break. Watch the California wealth tax and Washington state income tax proposals. Those are key. The economy is not taking a rest, however. Third quarter GDP grew at least 3.4%. Fourth quarter, they're on track for above 3%. Bond rates dropped about a third of a point last month following the AI debt worries that I mentioned earlier. We think rates are going to continue their rise starting early next year. Slightly lower rates right now, good earnings, a little less political uncertainty. That means a better landscape for performance. We're holding our positions for now; 'til next time.