Q3 Scorecard: The S&P 500 Added 2.0% and the Russell 2000 Lost 7.5% as the 10-Year Yield Climbed 87 Basis Points; Energy Led, Utilities Fell 13%

by Nora Halloran · October 2, 2026

Senior Analyst, US Market Current

The third quarter of 2026 ended Wednesday, Sept. 30, with the S&P 500 at 7,651.54, according to the Associated Press closing tabulation. It had closed the second quarter, on June 30, at 7,499.36, per the AP's wrap that day. On our arithmetic the index gained 152.18 points, or 2.03%, over the quarter. The AP's own year-to-date tallies bracket the same move: the S&P 500 was up 9.6% for 2026 at the end of June and 11.8% at the end of September.

The headline hides a split that ran through the whole quarter. The Nasdaq composite rose from 26,213.72 to 26,861.06, a gain of 2.47% on our arithmetic, and its year-to-date advance widened from 12.8% to 15.6% by the AP's count. The Dow Jones Industrial Average, which the AP noted closed June 30 at a record 52,319.20, finished September at 50,906.05, down 2.70% on our arithmetic; its year-to-date gain shrank from 8.9% to 5.9%.

Small caps had the worst quarter of the four benchmarks. The Russell 2000 fell from 3,024.37 on June 30 to 2,796.86 on Sept. 30, a decline of 7.52% on our arithmetic, and its year-to-date gain, 21.9% at midyear per the AP, had narrowed to 12.7% by quarter-end. Yahoo Finance historical rows for the S&P MidCap 400 show a move from 3,852.54 to 3,595.97, a 6.66% drop, and for the S&P SmallCap 600 from 1,804.34 to 1,654.96, down 8.28%, both our arithmetic.

The reason sits in the bond market. The CBOE 10-year Treasury yield index, as recorded in Yahoo Finance's historical rows, closed June 30 at 4.42% and Sept. 30 at 5.29%, a rise of 87 basis points on our arithmetic; the 30-year series went from 4.90% to 5.64%, and the five-year from 4.19% to 5.09%. The AP's Sept. 28 wrap said the 10-year had touched its highest level since 2007, and its Oct. 1 report said the yield was below 4% before the war with Iran began. The 13-week bill series rose from 3.73% to 4.03% over the quarter, consistent with the Federal Open Market Committee's quarter-point increase in the target range to 3.75% to 4% on Sept. 16.

That policy move was the quarter's defining event. The FOMC's Sept. 16 statement, approved 12-0, said "economic activity is expanding at a solid pace," that "inflation remains elevated," and that the action "will support a timelier return to the Committee's 2 percent goal." The committee's projections put the median federal funds rate at 4.1% for the end of 2026, above the new range, having been 3.8% in June.

The sector tape followed the rate and oil map almost exactly. Using closing prices of the Select Sector SPDR funds from Yahoo Finance historical rows and our arithmetic, Energy (XLE) rose from $53.11 to $61.50, a gain of 15.80%, the quarter's clear leader. The front-month U.S. crude contract in the same data set closed the quarter at $90.42 against $69.50 on June 30; because that series rolls between contracts, we are not stating a percentage for it. The AP's Sept. 29 wrap put Brent at $96.16 and its Oct. 1 report at $102.31.

Health Care (XLV) was the second-best sector, up from $158.66 to $168.42, or 6.15%; Communication Services (XLC) rose from $107.13 to $110.97, or 3.58%; and Technology (XLK) from $190.52 to $195.75, or 2.75%, roughly matching the S&P 500. Financials (XLF) were nearly flat, from $53.61 to $53.40, a decline of 0.39%. Those are price changes only and exclude the funds' quarterly distributions, so total returns would be modestly higher in each case.

The bottom of the table is where the yield move did its work. Utilities (XLU) fell from $45.34 to $39.44, a drop of 13.01%, the worst of the eleven. Industrials (XLI) fell from $185.23 to $166.98, down 9.85%; Consumer Discretionary (XLY) from $117.28 to $108.84, down 7.20%; Real Estate (XLRE) from $44.03 to $40.91, down 7.09%; Materials (XLB) from $50.83 to $48.70, down 4.19%; and Consumer Staples (XLP) from $83.07 to $80.60, down 2.97%. The S&P 500 Real Estate sector index itself, also from Yahoo rows, fell from 279.70 to 262.03, or 6.32%.

The pattern is a rates quarter rather than a growth scare. The Bureau of Economic Analysis on Sept. 30 revised second-quarter real GDP growth up to a 2.2% annual rate and said real final sales to private domestic purchasers rose 4.6%, and its August personal income report showed real consumer spending up 0.6% on the month. Rate-sensitive, dividend-heavy groups and small caps fell; large-cap growth and the energy producers on the right side of the oil shock rose.

Within the large-cap growth complex the picture was narrower than the Nasdaq's gain suggests. The Nasdaq-100, per Yahoo rows, moved from 30,276.35 to 30,408.50, a gain of only 0.44% on our arithmetic, well short of the composite's 2.47%. The AP's Oct. 1 report gave a sense of the dispersion, citing Micron up 284.5% for the year to date after a profit beat, and Nvidia as "the single strongest force lifting the S&P 500" that session.

Other quarter-end markers from the same historical rows: the CBOE Volatility Index closed Sept. 30 at 16.34 against 16.45 on June 30, essentially unchanged across a quarter in which the 10-year moved 87 basis points; the front-month gold contract rose from $4,038.50 to $4,186.70, or 3.67%; and the U.S. Dollar Index edged from 101.19 to 101.45. Volatility in equities, in other words, stayed contained even as the long end repriced.

The quarter also ended on a down note. The AP's Sept. 30 wrap said the S&P 500 slipped after "erasing gains from the morning" and that stocks "turned lower after reports suggested the U.S. economy was even stronger during the spring than earlier thought," with the Dow down 443.87 points on the day. On our arithmetic from Yahoo rows, September alone saw the S&P 500 slip 0.45% from its Aug. 31 close of 7,686.14, the Dow fall 4.29% from 53,185.90, and the Russell 2000 drop 5.40% from 2,956.45, while the Nasdaq composite rose 1.86% from 26,370.89. The quarter's gains for the large-cap indexes were therefore built in July and August and partially given back.

What the scorecard cannot tell you is whether the rate move is done. The FOMC's September projections, Governor Barr's Sept. 29 remark that "further policy adjustments are likely to be needed" in his base case, and Vice Chair Jefferson's Oct. 1 observation that "yields across the term structure have increased further" since the meeting all describe a central bank that has not declared the job finished. The fourth quarter opened Thursday with the S&P 500 at 7,666.45; the September jobs report arrived Friday morning with payrolls up 29,000 per the BLS, and Friday's close, the first of the new quarter to incorporate it, had not yet printed when this was written.