Affordability is a top concern for voters heading into the 2026 midterm elections (November 3), as rising prices squeeze household budgets. But interestingly, Social Security's future is also emerging as an important election issue for some.

An October AARP survey of likely voters in 43 competitive congressional districts found that 83% of voters age 50 and older see Social Security as very or extremely important when deciding how to vote. A Peterson Foundation survey of voters in five battleground states found that 81% were more likely to support a Senate candidate with a plan to prevent automatic benefit cuts.

Many would also support Social Security fixes that involve higher taxes for some workers.

The concerns come as Social Security's retirement trust fund is projected to deplete its reserves in just six years, 2032. To avoid an across-the-board reduction in scheduled benefits of about 22%, Congressional lawmakers will have to act before then to help close the program's funding gap.

Here's more to know about voter sentiment and what Social Security changes could mean for taxes.

Tax changes that could help shore up Social Security

First, Social Security isn't "going bankrupt," and benefits wouldn't completely cease if the trust fund reserves are depleted. However, without action from Congress, the retirement and survivor trust fund is projected to only have enough ongoing revenue to pay 78% of scheduled benefits after the reserves run out in late 2032, according to the 2026 Trustees Report.

Lawmakers could address the shortfall by increasing revenue, slowing benefit growth, or implementing a combination of changes. However, given deep divides in Congress, it's unclear when lawmakers will feel the urgency to pass bipartisan legislation.

In the meantime, several proposals are being floated.

Raise or eliminate the Social Security wage cap

One of the most widely discussed proposals would raise or eliminate the cap on earnings subject to Social Security payroll taxes.

• In 2026, workers pay the 6.2% Social Security tax on the first $184,500 in wages. Employers pay a matching amount, while self-employed workers generally pay the full 12.4%.
• Earnings above the annual cap/Social Security tax limit aren't subject to Social Security payroll taxes.

Sens. Elizabeth Warren (D-Mass.) and Bernie Moreno (R-Ohio), are calling for eliminating the Social Security payroll tax cap. The proposal would require higher-wage earners to pay Social Security taxes on more of what they earn.

But changing the Social Security tax cap would be more complicated than simply asking high earners to pay more taxes. Key questions Congress would have to address include how to change the cap and whether additional taxes would increase Social Security benefits for high earners.

The Peterson Foundation survey found that 72% of voters supported a proposal to impose an additional 1% payroll tax on earnings above the current 2026 $184,500 wage cap.

The Social Security Administration (SSA) estimates that eliminating the cap could close about 58% of the 75-year funding shortfall if additional taxed earnings don't count toward future benefits, or about 45% if they do.

Increase the payroll tax rate

Another option is to increase the Social Security payroll tax rate for workers and employers. The combined rate is currently 12.4%, split evenly between employees and employers. Self-employed workers generally pay both shares.

• The SSA has modeled a gradual increase of 0.1 percentage points annually beginning in 2032, bringing the combined rate to 14.4% in 2051.
• That would mean the employee share eventually rises from 6.2% to 7.2%, with employers paying the same increase.
• The change could close about 33% of the long-range funding shortfall.

A broader tax increase would bring in more revenue but would also likely impact workers across income levels — not just those earning above the current wage cap.

Tax investment income

Lawmakers could also look beyond wages for additional Social Security revenue. One SSA-modeled proposal would impose a separate 12.4% tax on net investment income for taxpayers with modified adjusted gross income (MAGI) above $200,000 for single filers or $250,000 for married couples filing jointly.

Such a proposal would:

• Apply to the lesser of net investment income or the amount by which MAGI exceeds the applicable threshold.
• Direct the additional revenue to Social Security, in addition to the existing 3.8% net investment income tax, which generally applies to certain investment income above those income thresholds and helps fund Medicare.

Note: The NIIT is a separate tax established under the Affordable Care Act; it does not fund Social Security.

This approach would shift some of the funding burden to higher-income households with investment income, rather than relying solely on payroll taxes on wages. SSA estimates that the proposal could close about 30% of the program's long-range funding shortfall.

Change to a fixed-rate cost-of-living adjustment

Under the current Social Security system, the annual cost-of-living adjustment(COLA) is a percentage based on inflation. The same percentage applies to each beneficiary's monthly benefit, so the dollar increase varies with the benefit amount.

• However, under a flat-rate SS COLA, the inflation-adjusted annual increase would be converted into a dollar amount based on the benefit of someone around the 20th percentile of the benefit distribution.
• Every beneficiary would then receive that same dollar increase.
• That would mean smaller annual increases for most beneficiaries, although people receiving lower benefits could fare better.

An AARP Public Policy Institute analysis found that 80% of beneficiaries would receive a smaller adjustment. For 2026, the average retired worker would have received an estimated $34.20 monthly increase under the proposal, compared with the actual $57.90 COLA.

The difference could compound over time. AARP estimated that a hypothetical retiree who began collecting benefits in 1998 would have received a benefit about 20% lower by 2026 under the flat-rate approach.

An analysis commissioned by the Committee for a Responsible Federal Budget (CRFB) found that giving smaller COLAs to retirees with higher benefits could close about half of Social Security’s long-term funding gap.

The SSA has studied a different approach: cutting annual COLAs by 0.5 or 1 percentage point, which estimates show could close about 24% or 46% of the gap, respectively.

Raising the retirement age

Another option would be to gradually increase the full retirement age (FRA), currently 67 for people born in 1960 or later. Workers could still claim retirement benefits as early as 62, but claiming before full retirement age permanently reduces monthly benefits. Raising the FRA would make those early-claiming reductions larger.

Supporters argue that longer life expectancies make a higher retirement age reasonable and that the change would reduce Social Security costs. But the actual effects wouldn't be the same for everyone.

• The SSA estimates that gradually raising the full retirement age to 68 could close about 11% of the long-range funding shortfall; raising it to 69 could close about 32%.
• In the Peterson Foundation survey, 52% of voters opposed gradually increasing the retirement age for younger workers.

What about Social Security for younger workers?

Speaking of younger workers…they may seem far removed from retirement, but they're already paying into Social Security and could face higher taxes or smaller future benefits depending on what Congress decides.

• Under the SSA's gradual payroll tax increase scenario, for example, the employee tax rate would eventually rise from 6.2% to 7.2%.
• For someone earning $50,000 a year, that would mean paying an additional $500 in Social Security payroll taxes annually once the increase is fully phased in.

Meanwhile, high housing, healthcare, and everyday living costs can make it harder for younger workers to save for retirement. With traditional pensions increasingly rare, many wonder how much they can count on receiving from Social Security when they stop working.

• A December 2025 Cato Institute survey found that only 34% of Americans under age 30 believed Social Security would exist when they retire.
• Nearly eight in 10 (78%) expected to receive less than their full scheduled benefits.
• A separate Nationwide Retirement Institute survey found that 45% of Gen Z and 39% of millennials believed they would never collect Social Security benefits.

And keep in mind, Social Security isn't just about retirement. The program also provides survivor benefits to eligible children and spouses when a working parent dies, as well as disability benefits to eligible workers who can no longer earn a living.

Social Security solvency: Bottom line

It's worth noting that even if Social Security reserves are depleted, payroll taxes and other incoming revenue would continue to fund a substantial share of scheduled benefits. So, Congress still has time to change the program's financing trajectory.

For now? Check your earnings record and estimated benefits through your Social Security account. Younger workers can use the estimates to understand what they may receive under current law, while those nearing retirement should compare benefits at different claiming ages and consider how Social Security fits into their retirement income plan.

But also stay tuned. With the 2026 midterms approaching and the 2028 presidential election on the horizon, pay attention to where your representatives stand on Social Security and what they propose to secure its future.

Related

This article is part of a mini-series on the tax impacts of various proposals to shore up Social Security.

• What a Flat-Rate Social Security COLA Could Mean for Retiree Taxes
• How Eliminating the Social Security Tax Cap Could Mean for High Earners

For more on midterm ballot measures, check out our reports: Midterm Election Tax Measures Target High-Income and Property Tax Changes on the Ballot in 7 States.

All three main equity indexes gapped down at Friday's open, as the rotation out of technology and artificial intelligence infrastructure accelerated to a frightful pace on All Hallows Eve. Investors, traders and speculators are seeking safety in energy, consumer staples and healthcare stocks, as well as Treasury bonds, amid rising concern about capex plans and return on AI.

By the closing bell, the Nasdaq Composite had fallen 2.9% to 25,437, the tech-heavy index's steepest single-day decline since March 2025, turning what had been a modest weekly gain into a 2% weekly loss.

The broad-based S&P 500 was off 1.8% at 7,580, resulting in a 0.6% decline for the week. The blue-chip Dow Jones Industrial Average was down 1.1% today to 51,770. Papa Dow dipped 0.9% this week.

"Mega-cap stocks have faced increased selling pressure over the past two weeks as elevated AI-related spending and rising financing costs raise concerns over the path to profitability," LPL Financial Chief Cross-Asset Strategist Adam Turnquist observes. "Recent earnings reports have added to these concerns, revealing slowing growth in select hyperscalers' core businesses."

Alphabet (GOOGL, -1.4%) reported its weakest ad revenue growth in five quarters, while e-commerce sales for Amazon (AMZN, -1.4%) slowed to a three-year low. But Microsoft (MSFT, -1.6%) reported a nice pop for cloud revenue, including expectations-beating Azure sales.

Still, according to Turnquist, the Magnificent 7 stocks are showing signs of weakness from a technical perspective.

Indeed, the Magnificent Seven Index has broken below support near its May highs and is approaching another key level. Relative strength "is also at a critical inflection point," with more deterioration from here suggesting leadership "is rotating away from mega-cap stocks."

The wider technology complex was also destabilized on Friday by a reported $6.3 billion hack of cryptocurrency exchange Binance engineered by agents of North Korea's government.

Intel is way outside

Intel (INTC, -28.6%) was the worst S&P 500 stock on Friday after management reported mixed results and offered weak guidance, amid a more-rapid-than-anticipated deceleration for its core PC market.

The chipmaker expects to report earnings of 25 cents per share for the fourth quarter on revenue of $15 billion to $16 billion. Wall Street forecast EPS of 45 cents on revenue of $17.3 billion.

Other semiconductor stocks got dragged down, too, including Advanced Micro Devices (AMD, -10.9%), which is scheduled to report third-quarter earnings after the closing bell on Tuesday.

Nvidia (NVDA, -4.2%) was the worst Dow Jones stock. Fellow Mag 7ers Meta Platforms (META, -1.5%) and Tesla (TSLA, -0.9%) looked better by comparison.

Apple (AAPL, -1.2%) will be the sixth Magnificent 7 stock to report this season when it reveals fiscal fourth-quarter results after Monday's closing bell.

As Turnquist explains, AAPL outperformed this month because the iPhone maker is "more asset-light compared to peers" and is still generating strong positive free cash flow.

Crude oil up, bond yields down

The front-month West Texas Intermediate crude oil futures contract rose 2.4% to $104.45 per barrel, and Brent futures added 1.5% to $112.44, reflecting expectations the war in the Middle East will intensify after midterm elections in the U.S.

The 2-year Treasury yield (-6.4 basis points, 4.592%), as well as the 10-year (-5.8 bps, 4.931%) and the 30-year (-1.9 bps, 5.31%), declined as investors bid up bond prices in their search for safety.

Meanwhile, the Bureau of Labor Statistics (BLS) will share its October update on the employment situation before the opening bell next Friday. Markets expect the data to reflect continuing stability.

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Indeed, even after a cooler-than-expected September jobs report, the Federal Open Market Committee (FOMC) remains focused on the inflation problem.

That includes Cleveland Fed President Beth Hammack, who dissented from the decision to hold interest rates steady at the October Fed meeting and promises to generate economic calendar sparks next Thursday.

Note that the Treasury Department announced an I-bond rate of 5.51%, which is fixed for the six months through April 30, 2027, and looks even more attractive after today's price action.

What is it about Berkshire Hathaway?

Berkshire Hathaway (BRK.B, +0.3%), because of what's inside Warren Buffett's and Greg Abel's portfolio, is a lot like an equity index fund. It's actually the biggest financial stock in the S&P 500.

But Berkshire's holdings include American Express (AXP, -1.4%) and Bank of America (BAC, -2.2%), as well as Apple, which remains the biggest holding, and Alphabet, which will go down as Buffett's last major equity buy.

It also includes consumer staples such as Coca-Cola (KO, +1.4%), energy stocks such as Chevron (CVX, +1.7%) and industrials such as Delta Air Lines (DAL, -1.8%).

Today, the blue chip stock traded like a safe haven. Next Saturday, Abel's team will report quarterly earnings for the first time since Buffett's retirement as chairman of the board in September.

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Homeownership has traditionally been viewed as a financial milestone, but in today’s housing market, that milestone comes with a hefty price tag. From increasing mortgage interest rates to rising home prices as well as the ongoing costs of ownership, many Americans may be considering whether buying a home makes financial sense.

When it comes to renting, that isn't necessarily cheap either. But recent data does suggest it could offer some financial breathing room for households that are considering moving.

If you're wondering if it's more affordable to rent or buy a home in late 2026, here's how the numbers compare and what to consider before making your next move.

How much does it cost to rent in 2026?

According to Realtor.com's September 2026 rental report, the median asking rent across the 50 largest U.S. metropolitan areas was $1,694 per month, down $6, or 0.4%, from a year earlier. This marked the 38th consecutive month of year-over-year rent declines.

Renters are still paying considerably more than they did pre-pandemic though. The national median asking rent remains 14.5% higher than in August 2019, but it's also $80 below its summer 2022 peak.

These figures reflect advertised asking rents for studio, one-bedroom and two-bedroom properties rather than what existing renters necessarily pay.

How much does it cost to buy a home in 2026?

Buying a home has always required a much larger financial commitment upfront when you consider factors like a down payment, closing costs, insurance and taxes, and savings for possible maintenance and repairs. But monthly mortgage payments themselves have left many potential buyers feeling tight on cashflow.

According to the National Association of Realtors, the median existing-home sale price reached $417,500 in September 2026, up 1.3% from a year earlier.

Meanwhile, the average 30-year fixed mortgage rate was 7.24% as of October 29, according to Freddie Mac.

Here's what buying a median-priced home could look like with a 20% down payment:

• Home purchase price: $417,500
• Down payment (20%): $83,500
• Mortgage amount: $334,000
• Mortgage term: 30 years
• Interest rate: 7.24%

Under this scenario, the monthly principal and interest payment would be approximately $2,280.

But your mortgage payment isn't the only expense to consider. Property taxes and homeowners insurance can add hundreds of dollars to your monthly housing costs. Maintenance, repairs and homeowners association (HOA) fees can increase those costs even further.

Buyers who put down less than 20% may also have to pay private mortgage insurance (PMI), which would increase their monthly payment. All of these expenses can add up quickly, potentially making some prospective buyers hesitant if the costs stretch their budget.

However, that doesn't necessarily mean buying a home is the wrong move. If homeownership is one of your goals, take time to review your budget, build up your savings and make sure you're financially prepared for both the upfront and ongoing costs of owning a home.

National averages only tell part of the story. Compare current mortgage options to see what buying a home could look like for your budget with the tool below:

Renting vs. buying: Here's the monthly cost difference

Based on current housing prices and mortgage rates, renting is significantly cheaper than buying when comparing monthly payments.

Here's a breakdown of the estimated monthly costs using national housing data and illustrative property tax and insurance expenses.

Sources: National Association of Realtors, Realtor.com and Freddie Mac. Buying calculations assume a $417,500 purchase price, 20% down payment and a 30-year fixed mortgage at 7.24%. Property taxes and homeowners insurance are illustrative estimates. Renters insurance, maintenance and HOA fees are not included.

Based on these estimates, buying a home costs approximately $1,130 more per month than renting, or about 67% more. Over 12 months, that difference adds up to roughly $13,560.

And that doesn't include the $83,500 down payment, closing costs or ongoing home maintenance expenses.

However, this comparison reflects monthly out-of-pocket costs rather than the long-term financial benefits of renting versus owning. While homeowners typically pay more each month, a portion of their mortgage payment goes toward building equity.

It's also important to remember that this comparison doesn't account for differences in property size, location or amenities. The national median rental and median-priced existing home aren't necessarily comparable properties.

Is it better to rent or buy right now?

For Americans looking to keep their monthly housing expenses manageable, renting may be the more affordable option in today's market, but it ultimately depends on your current financial situation and goals along with the housing market in your area.

Generally, though, renting can also make sense if you're planning to move within the next few years or don't have enough savings for a down payment, closing costs and unexpected home repairs. Plus, renters typically don't have to worry about paying for major maintenance expenses, such as replacing a roof or repairing an HVAC system.

However, buying a home still has its advantages, especially if you're financially prepared and plan to stay there for several years. Homeownership allows you to build equity over time, and a fixed-rate mortgage provides predictable principal and interest payments, even as property taxes and insurance costs can fluctuate.

Ultimately, the right decision depends on your budget, long-term plans and local housing market. National averages offer a useful starting point, but comparing rental prices with the full cost of owning a similar property in your area will give you a clearer picture of which option makes the most financial sense.

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Stocks opened lower Thursday and stayed there through the close as market participants wondered what another hot inflation reading means for a December rate hike. The latest batch of corporate earnings also kept a lid on sentiment, with a rare miss from Google's parent, Alphabet (GOOGL), sending the mega-cap stock sharply lower — and renewing fears over big AI spending.

At the close, the tech-heavy Nasdaq Composite was down 1.4% at 26,184, the broader S&P 500 was off 0.3% at 7,720, and the blue-chip Dow Jones Industrial Average was 0.3% lower at 52,342.

Alphabet created a massive drag on the three main equity benchmarks, shedding 12.6% — its worst day ever — after the Google parent unveiled its third-quarter results.

GOOGL reported earnings of $2.67 per share, down 7% year over year, on revenue of $127.6 billion (+25% YoY). The results fell short of Wall Street's estimates for earnings of $3.00 per share on $127.9 billion in revenue, and marked the company's first double miss since Q4 2022.

Alphabet also reported negative free cash flow of $9.07 billion and Q3 capital expenditures of $51.4 billion. The company maintained its full-year capex forecast of $195 billion to $205 billion.

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Long-term debt, meanwhile, jumped to $125.1 billion from $21.6 billion the year prior, signaling a sharp rise in borrowing to fund its AI initiatives.

The quarter-over-quarter slowdown in Search ad revenue growth (+12% YoY in Q3 vs +17% YoY in Q2) outweighs all other points in the print, says Wedbush analyst Ygal Arounian. Worries over free cash flow and spending also weighed on the stock.

But Arounian, who has an Outperform (Buy) rating on Alphabet, believes the company is "well positioned, with a strong ecosystem that, yes, is evolving, but with the pieces in place to capitalize." And Google, he adds, "will prove a winner as AI advertising evolves."

Caterpillar stock has its worst day in six years

Alphabet was the worst Dow Jones stock today, but Caterpillar (CAT) came in a close second. The blue chip stock sank 9.3% — its biggest one-day decline since March 9, 2020 — after the construction equipment maker reported its Q3 results.

CAT said earnings grew 45.5% year over year to $7.20 per share, more than analysts expected. But revenue of $20.7 billion (+17% YoY) fell short of the $20.8 billion Wall Street called for.

"Results reflected strong sales to users across all three primary businesses, led by 75% growth in" its Power & Energy segment, says Oppenheimer analyst Kristen Owen. This division, which supplies AI data centers, has seen impressive growth in recent quarters.

"On the outlook, CAT called for moderate year-over-year growth in Q4 despite difficult YoY comps and change in dealer inventory headwinds, supporting its unchanged mid-to-high teens FY26 revenue growth expectation," Owen adds.

September PCE shows inflation remains elevated

Wall Street also kept a close eye on today's economic calendar. In the wake of what many are describing as a hawkish pause from the Federal Reserve at its October meeting, data from the Bureau of Economic Analysis (BEA) showed the Personal Consumption Expenditures (PCE) Price Index — the central bank's preferred inflation gauge — rose 0.5% from August to September. PCE was up 3.6% year over year.

Core PCE, which excludes volatile food and energy prices, increased 0.3% month over month and was 3.1% higher than the year-ago period.

"Although the inflation data came in line with expectations, because it is higher than the prior month, it emphasizes the problem we face — inflation is not coming down to the 2% target," says Chris Zaccarelli, chief investment officer for Northlight Asset Management.

Still, he says the current inflation level "isn't terrible; it will just require slightly higher interest rates. And despite all of this, growth is very good." Indeed, a separate BEA report showed the U.S. economy grew 3.4% in the third quarter.

Expectations for a December rate hike fell slightly after Thursday's economic data. CME Group FedWatch shows futures traders are pricing in a 78% probability the Fed will increase the federal funds rate by a quarter-percentage point in December, down from 84% one day ago.

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With rising mortgage rates, high home prices, and strict lending standards, intergenerational wealth is becoming the key to homeownership among younger adults.

A recent LendingTree down payment survey revealed that 40% of all current homeowners in the U.S. received financial help with their down payment. That's up from 35% in 2023. More importantly, over a third of those buyers admitted they couldn't have bought their home without that outside assistance.

Helping a child buy a house is an exciting family milestone. But cutting a check without analyzing the tax code can trigger unintended IRS reporting rules, potential capital gains liabilities, and complex estate-planning math.

Failing to plan before moving the money can transform a generous gift into one with unintended tax consequences. Read on.

Where down payment cash originates

The reliance on family wealth for a home down payment breaks down along sharp generational lines. LendingTree found that:

• Generation Z (ages 18–29): Nearly 78% received financial assistance with their down payment.
• Millennials (ages 30–45): Over half (56%) obtained financial help.
• Baby Boomers (ages 62–80): Just 12% received outside assistance when buying their current home.

The demographic splits reveal another layer. Women were far more likely to consider financial assistance necessary: 44% reported they couldn't have purchased without outside backing, compared to just 29% of men.

However, household income had less influence on who asks for help. Homeowners earning less than $30,000 (43%) and those earning $100,000 or more (42%) received down payment help at virtually identical rates.

Yet how that money gets structured dictates tax compliance. Almost half of recipients (48%) received the funds as a gift, 28% took the money as a loan, and 25% used a combination of both. For the gift cohort, tax rules kick in when the funds leave the parents' account.

The $19,000 exclusion rule

Perhaps the most common tax fear among parents is that wiring a gift triggers immediate taxes. In reality, the tax code protects almost all families from paying a dime out of pocket.

Recipients never pay federal income tax on cash gifts, regardless of the size. The donor rarely pays an immediate tax either; parents incur no federal gift tax liability unless their cumulative giving crosses a statutory threshold.

For 2026, the annual gift tax exclusion sits at $19,000 per donor, per recipient. This means:

• A single parent can give up to $19,000 in a calendar year without reporting anything to the IRS.
• Married filing jointly donors can contribute up to $38,000 per child without triggering paperwork.

The limit may be even higher for some families, according to financial experts at American Century Investments. If an adult child is buying a home with a spouse or partner, both parents can give $19,000 to each person in the couple. That allows two parents to transfer up to $76,000 in a single calendar year ($19,000 × 2 donors × 2 recipients) without triggering IRS reporting.

What happens when parents cross the cap

Exceeding the annual gift threshold doesn't trigger an instant tax payment from the parent. Instead, it triggers an informational reporting requirement.

The donor must submit IRS Form 709 (Gift and Generation-Skipping Transfer Tax Return) by the April 15 tax deadline following the year of the gift.

Form 709 tracks how much of the federal unified lifetime exemption has been used. The 2026 lifetime estate tax exemption sits at roughly $15 million per individual (or $30 million for a married couple).

Because that cap is so high, almost no one ever pays an actual gift tax. However, standard home down payments easily overshoot the annual allowance.

• Federal Reserve Economic Data (FRED) shows the national median home sales price hovering around $408,500 in the first quarter of 2026.
• At the same time, LendingTree data shows that buyers put down a significant amount to secure a home. For instance, 23% paid at least 20% to avoid private mortgage insurance (PMI) and minimize monthly payments.
• A 20% down payment on a median-priced home comes to about $81,700.

If a single parent wires $81,700 directly to a child's escrow account, the gift exceeds the annual exclusion by $62,700. The parent must file Form 709 the following spring.

While no tax is due, failing to file the form means the IRS statute of limitations never starts running. That leaves the transaction open to audit scrutiny indefinitely and can create messier estate reconciliation for heirs later.

Watch out for capital gains tax and asset traps

Although the cash transfer itself is rarely taxed, how parents generate that cash can create immediate financial liabilities. For instance, parents may liquidate investments — which can trigger three primary tax traps:

• Capital gains realization: Selling appreciated stocks or mutual funds in a taxable brokerage account triggers capital gains taxes in the year of sale. Depending on income, long-term capital gains tax rates can sit at 15% or 20%, plus a potential 3.8% net investment income tax (NIIT).
• Retirement account income spikes: Pulling cash from a traditional IRA or 401(k) counts as regular taxable income. Parents may be bumped into a higher federal tax bracket or trigger Medicare IRMAA surcharges if they tap these accounts for a down payment.
• Loss of the step-up in basis: Transferring appreciated property or assets directly during life forfeits the step-up in basis that heirs would receive upon inheriting the asset after death. (For more information, see Kiplinger's report, How Your Inheritance Actually Gets Taxed: From Stepped-Up Basis to IRA Rules.)

Before liquidating a portfolio, financial advisors often suggest that taxpayers consider state down-payment assistance programs first. For example, North Carolina offers a $15,000 forgivable mortgage for eligible first-time homebuyers.

If parents choose to move forward with financial help, experts typically also recommend explicitly formalizing whether the funds are a gift or a loan. The IRS requires private family loans to charge at least the Applicable Federal Rate (AFR), and lenders report that interest as taxable income.

Key takeaways for parents

Helping adult children secure a home provides a valuable financial leg up in a tight housing market. But making a large financial gift requires balancing parental generosity with sound tax management.

Before writing the check, parents should keep these three fundamentals in mind:

• Leverage gift timing: Use year-end timing across December and January to transfer larger sums without triggering extra paperwork. For example, a parent can give $19,000 before December 31 and another $19,000 in January without exceeding the annual exclusion in either tax year (though the 2027 annual gift tax exclusion may be higher).
• File Form 709 without fear. If a parent's gift exceeds the annual cap, file the informational return. It tracks against the multi-million-dollar lifetime exemption and will not cost taxpayers out-of-pocket tax dollars.
• Calculate the cost of cash. Parents should factor in the capital gains tax or retirement-income hit before liquidating assets, ensuring that helping their child buy a home doesn't compromise their own long-term financial security.

A quick conversation with a qualified tax professional and a clear paper trail today can ensure that parents helping their children build home equity doesn't create an unnecessary tax bill tomorrow.

This article does not cover state income or gift taxes and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

Read more

• How the IRS Values (and Audits) an Inherited Home
• About 40% of Heirs Say They Can't Afford an Inherited Home
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Stocks rallied after the Federal Open Market Committee (FOMC) announced a widely anticipated decision to hold its benchmark interest rate steady on Wednesday, even as markets priced in rising probability of more war in the Middle East. The main equity indexes were comforted by Fed Chair Kevin Warsh's explanation for the pause, as well as a new change to FOMC meetings moving forward, but still weakened late in the session.

According to The Wall Street Journal, the U.S. is telling allies in the Persian Gulf region "to be prepared for a short, intense military campaign" against Iran following next week's midterm elections.

"We did a little cease-fire, which I never liked very much," President Donald Trump said at a campaign rally in Corinth, Mississippi, on Monday. "I consider it sort of a waste of time. But, you know, you like to listen to professionals."

The front-month West Texas Intermediate crude oil futures contract rose 2.7% to $102.56 per barrel, while Brent futures, the international benchmark, added 1.8% to $111.40.

Market-based interest rates were mixed, with the 2-year Treasury yield tracking back 3.1 basis points to 4.706%, but the 10-year (+3.3 bps, 5.024%) and 30-year (+4.6 bps, 5.351%) ticking higher for the day.

By the closing bell, the broad-based S&P 500 was up 0.3% at 7,743, the blue-chip Dow Jones Industrial Average had added 0.2% to 52,475, and the tech-heavy Nasdaq Composite was higher by 0.3% at 26,549.

Fed puts inflation fight on hold

The FOMC voted 10-2 to maintain the target range for the federal funds rate at 3.75% to 4.00%, noting as it did in September that the economy is strong, capex is robust and the unemployment rate is little changed.

At the same time, inflation remains elevated, as does uncertainty, "owing, in part, to geopolitical developments." The FOMC said waiting for more information will help it decide what to do about getting back to its 2% inflation target. "The Committee will deliver price stability," it repeated.

"It's our responsibility to get inflation down," Warsh said during his post-meeting press conference. "That's the reason the FOMC's discussion over the last couple of days focused mainly on the price stability side of our remit."

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The Fed chair added that he and the committee have "made clear our readiness to act as circumstances require, and we have shown our willingness to act."

Note that the main indexes turned positive across the board after Warsh said that the Fed will still have eight meetings in 2027. However, one of those meetings will not include a policy decision or statement; rather, it will be devoted to the central bank having richer conversations and strategic deliberations about monetary policy.

In 2028, two of the Fed's eight meetings will likely not have a policy decision or statement.

You can follow more news and updates about the October Fed meeting on our live blog.

Vertiv goes vertical, Alphabet and Microsoft take center stage

"Meanwhile," observes BlackRock Global Chief Investment and Portfolio Strategist Gargi Pal Chaudhuri, "strong corporate earnings continue to support our constructive outlook on equities, particularly AI, where demand remains robust."

Chaudhuri says earnings growth is broadening beyond tech stocks.

Indeed, Vertiv Holdings (VRT, +16.5%), basically an HVAC company that specializes in cooling down AI data centers, reported greater than 100% organic order growth for the third quarter, as the industrial stock beat Wall Street's revenue and earnings estimates, as well as analysts' Q4 forecasts.

"Results materially strengthen the execution thesis," Oppenheimer analyst Noah Kaye writes in a review of Vertiv's results, noting that management continues to expect to benefit from pricing power amid rising costs this year.

Kaye reiterated his Outperform (Buy) rating and his $325 12-month target price, with results also underscoring demand reacceleration.

Investors, traders and speculators will look for more signs of sustainability for that kind of demand trajectory as Alphabet (GOOGL, +1.3%) and Microsoft (MSFT, -0.06%) report results and share guidance after today's closing bell.

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Stocks closed higher Tuesday as market participants panned a busy batch of corporate earnings reports and looked ahead to tomorrow's Federal Reserve policy announcement. Chip stocks were a notable pocket of strength, with several mega caps soaring on news of a $63 billion deal between Broadcom (AVGO) and Anthropic (ANT).

At the close, the tech-heavy Nasdaq Composite was up 1.2% at 26,477, the broader S&P 500 was 0.6% higher at 7,722, and the blue-chip Dow Jones Industrial Average had added 0.03% to 52,377.

Broadcom jumped 4% to trade near the top of the S&P 500 after the chipmaker late Monday announced a $63 financing deal that will allow Anthropic to buy AVGO's artificial intelligence (AI) technology.

The agreement is not a straightforward purchase. Rather, several major financial institutions — Bank of America (BAC, +0.3%), Blackstone (BX, -1.0%), and Morgan Stanley (MS, +1.9%) — will finance purchases of Broadcom's AI chips and infrastructure via a special purpose vehicle (SPV), which will then lease the hardware to Anthropic.

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"The announcement should help ease investor fears around financing the AI buildout, in our view," says Oppenheimer analyst Rick Schafer, who has an Outperform (Buy) rating on the semiconductor stock. "AVGO is providing residual value support (RVS) up to the first-lien financing amount rather than an upfront cash investment."

The upside had a halo effect on other chipmakers, including Advanced Micro Devices (AMD, +5.5%), Intel (INTC, +3.6%) and Micron Technology (MU, +2.8%).

Boeing stock slumps after earnings

Boeing (BA) was the worst Dow Jones stock today, shedding 10.7% — its worst day since June 2020 — after the aerospace giant reported earnings.

While Boeing's third-quarter revenue of $24.2 billion came in higher than expected thanks to strong sales in its defense unit, its per-share loss of 34 cents was wider than analysts forecast.

The company also said it does not expect to ramp up production of its 737 Max planes until the second half of next year on slower-than-expected wing production.

JetBlue stock soars on strong outlook

After hitting a record low on Monday, JetBlue (JBLU) soared 19% today, its best day since April 9, 2025, after the discount air carrier reported earnings.

JBLU had a wider-than-expected per-share loss in Q3, and its revenue came in just shy of analysts' estimates. However, the company said it expects its revenue per available seat mile (RASM) — a key financial metric for airlines — to increase as much as 22% in Q4.

"All in, JBLU's trends appear to be strong operationally in areas within control," says UBS Global Research analyst Atul Maheswari. "High fuel costs remain a headwind, but we continue to believe JBLU has enough liquidity reserves to manage through at least the near term."

Consumer confidence rises ahead of the October Fed meeting

Several economic reports were released Tuesday, including better-than-expected readings on September new home sales and durable goods.

The Conference Board also released its latest Consumer Confidence Index, which rose 7.5 points from September to October, to 91.7.

The data reflect "improved perceptions of current and expected business conditions," says Fergus McCormick, senior economist of global indicators at The Conference Board.

Still, McCormick notes that consumer confidence remains in a long-term downtrend. "Consumers planned less spending on services and durable goods over the next six months. This likely reflected higher price levels and persistent inflation, which eroded consumers’ purchasing power."

Indeed, "further strength in the coming months is still required for the trend to turn and become a more meaningful tailwind," says Jordan Rizzuto, managing partner & CIO at GammaRoad Capital Partners.

The economic calendar remains busy the remainder of the week, with all eyes on tomorrow's conclusion of the October Fed meeting. You can follow along with all the latest news and updates on our live blog.

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Stocks rebounded Monday on the revival of the artificial intelligence trade, as the developer of the Claude large language model and AI assistant filed for what would be the biggest initial public offering (IPO) in stock market history. Markets are also looking forward to quarterly reports from three more Magnificent 7 stocks, as well as this week's Federal Open Market Committee meeting, which begins tomorrow and concludes on Wednesday.

"AI jitters and oil prices have kept stocks off balance," E*TRADE From Morgan Stanley Managing Director Chris Larkin observes, "but this week's lineup of high-profile earnings and economic data may have the potential to push the market out of its trading range — one way or the other."

As Larkin notes, the Fed will probably hold interest rates this week, so "traders will be focused on tech earnings, especially hyperscalers Microsoft and Amazon, to gauge the strength of the AI trade as we head into year-end."

The front-month West Texas Intermediate crude oil futures contract was down 1.8% to $101.48 per barrel. WTI has risen more than 12% in October, as investors, traders and speculators continue to balance risks of escalation after midterm elections in the U.S. with improving flows from the Middle East.

Meanwhile, the yield on the 2-year Treasury was up 3.2 basis points to 4.716%, while yields on the 10-year (-0.2 bps, 4.986%) and the 30-year (-1.6 bps, 5.299%) were lower for the day.

By the closing bell, the tech-heavy Nasdaq Composite had risen 0.8% to 26,169, the broad-based S&P 500 was up 0.7% at 7,676, and the blue-chip Dow Jones Industrial Average had added 0.3% to 52,361.

What the Fed will do (and when the Fed will do it)

Like most market participants, Deutsche Bank Senior U.S. Economist Brett Ryan expects the Fed to hold the target range for the federal funds rate at 3.75% to 4.00% this week. At the same time, Ryan says dissents from a decision to hold are likely.

The economist expects Fed Chair Kevin Warsh's post-meeting press conference to focus on why the FOMC decided not to raise rates, how recent inflation data has impacted the monetary policy outlook and what, if anything, has changed about the committee's assessment of financial conditions amid recent AI-related volatility.

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"Warsh is likely to signal that recent inflation data reinforce expectations from the September meeting that further tightening will likely be needed over time," the economist concludes. "However, skipping October allows officials more time to assess trends in the data."

You can follow updates and commentary about this week's event on our October Fed meeting live blog.

Should you buy ANT stock?

Anthropic has a ticker symbol, and if everything goes according to plan, ANT will start trading on the Nasdaq next month. One analyst who covers the IPO market says it'll be the first major generative AI pure play to come to market.

So, should you buy ANT stock?

According to Kiplinger's Tom Taulli, "Investors will need to weigh Anthropic's explosive growth against its massive infrastructure spending, fierce competition, safety risk and lofty valuation before deciding whether to buy the IPO."

Listen to what the hyperscalers say

Alphabet (GOOGL, -1.1%) and fellow Mag 7 members Amazon (AMZN, +0.4%) and Microsoft (MSFT, +1.5%) will report top- and bottom-line results amid rising concern about whether we're in an AI bubble rather than an AI boom.

Stifel analysts say markets will watch consumption trends, as well as free cash flow and capex, with emphasis on Azure for Microsoft, Google Cloud Platform for Alphabet and Amazon Web Services for Amazon.

Stifel suggests Azure will top a consensus forecast for 46% to 48% year-over-year revenue growth, "driven by incremental efficiencies, ramping new data center capacity and a growing OAI (Azure OpenAI) acceleration."

The analysts note that GOOGL is on a streak of four consecutive quarters of accelerating revenue growth, supported by spiking cloud business. For its part, AMZN's sequential revenue acceleration streak is at five quarters and counting.

As Stifel notes, Amazon management has already said it won't have enough capacity in 2026 or 2027 and "demand we already have for 2028 is striking."

Meta Platforms (META, -1.9%) and Tesla (TSLA, +5.2%) posted their most recent results last week.

Apple (AAPL, -1.1%) is scheduled to report after the closing bell next Monday, November 2. Though management hasn't yet confirmed the date, Nvidia (NVDA, +2.4%) is expected to host its earnings event after the closing bell on November 18.

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To help you understand what's going on in the economy, business and politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts(Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Less than two weeks until the midterms and the Democrats are on pace for notable gains. The party is on the cusp of winning one chamber of Congress, and possibly both, if current trends hold.

President Trump’s policies are on the ballot, as he himself said. Unfortunately for him, his low approval ratings (south of 40%) have GOPers in battleground districts and states keeping him at arm’s length. Voters, overall, are in a sour mood, amid the Iran war, high fuel prices, trade wars, stubborn inflation, etc., and many place the blame on the party in power.

While the party out of power usually makes gains in midterm elections, we expect Democrats to do better than the historical norm. Democratic voter enthusiasm is high, though not always for individual candidates. Rather, those voters are eager to put up a roadblock against Trump’s policies.

Turnout also may be an issue for Republicans with the president not on the ballot. Republicans do have a big money advantage and are spending heavily now, with these midterms shaping up to be the most expensive in history. The GOP’s cash advantage could tip the scale its way, but probably isn’t enough.

Democrats are on track to win the House, with gains of 15 to 25 seats, which would give the party a majority similar to the one it won in the 2018 midterms. Political shifts have nearly neutralized the GOP’s redistricting advantage and taken one-time pickup opportunities, including some majority-Latino districts in Texas, out of contention. The effort may net them a handful of seats at most. Meanwhile, Republican spending is picking up in usually safe red districts, a sign that the party feels pressure to shore up potential political vulnerabilities.

The Senate is a bigger question. Democrats need a net gain of four seats, a tall order. And they are running in more competitive races than Republicans are. But races in GOP-held Alaska, Iowa, Kansas, Maine, Ohio and Texas are unusually tight, with Democratic candidates polling ahead or about even in each. Dems are also likely to flip a GOP-held seat in North Carolina and hang on to seats in battlegrounds Georgia and New Hampshire.

Republicans’ best shot at flipping a Democrat-held seat is Michigan, as the race is extremely tight. Winning there would significantly help the GOP retain the Senate.

Overall, Democrats hold the slightest of edges to capture the Senate. Whichever party wins, the margin of their majority will be slim, only a seat or two. If the GOP loses even one chamber, Trump’s legislative agenda would falter, unless he decides to strike deals with Democrats. But his working relationship with the party is almost nonexistent, and Dems are in no mood to change that. If they win the Senate, Trump’s cabinet and judicial nominees will also face long odds.

This first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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The new documentary You Can See Everything about Theranos founder Elizabeth Holmes hit screens with a bang this month. Directors Nathan Fielder and Lance Oppenheim kept the movie a secret until its premiere, and buzz has been building about what it reveals.

It was unexpected for Fielder to make a documentary about Holmes. He's worked in his own particular sort of reality TV for years, first with the show Nathan for You and next with The Rehearsal. While these shows tap into the human psyche in their own ways, as he says in You Can See Everything, he's far from an expert on chemistry or the Theranos case, and over the course of the filming, he seems increasingly confused about what he's doing there, which is also a central point of the documentary.

Much of this movie has been kept hush-hush, and it's an enjoyable experience to watch it unfold in a theater. If you haven't seen the movie yet and don't want to read any "spoilers," stop reading now before we get into the nitty-gritty.

While the documentary is ostensibly about Holmes, it's also about her partner, Billy Evans, and their relationship. After Holmes goes to a federal prison camp to serve her sentence for defrauding investors, Evans reveals on camera that he has power of attorney (POA).

He says that the power of attorney gives him the right to do many things on Holmes' behalf. The documentary shows him tweeting online from Holmes' X account, not indicating that it's not her posting (and not asking for her approval for what he writes), and creating an AI avatar of her likeness.

He's also working on a new business with her, although he says he is largely making decisions on their behalf while she's imprisoned.

"The documentary shows how far people assume a POA reaches," Debra Taylor, managing partner and wealth adviser at Carson Wealth, tells Kiplinger.

What, exactly, does power of attorney give a person the right to do, and how does it work?

1. What 'powers' does a power of attorney grant?

A POA is a legal document that grants someone, called an agent, authority to make decisions on a person's behalf in the event of their incapacitation.

Typically, one document grants medical power of attorney, and one grants financial power of attorney. As the names suggest, one gives the right to make healthcare decisions, while the other covers finances.

"A broadly drafted financial POA can give an agent authority over the principal's business interests," Taylor explains. "Certain powers, such as making gifts, changing beneficiaries or creating trusts, generally must be granted expressly. Many states require specific language in the document to authorize sensitive transactions such as gifting or certain banking transactions."

Does that mean, then, that a person could, say, speak on another's behalf outside specific decisions?

"A POA lets an agent sign and transact on the principal's behalf. It does not make the agent's opinions the principal's words. In most states, an agent has no right to access the content of the principal's email and private messages unless the document specifically grants it," Taylor says.

2. Can power of attorney be triggered by incarceration?

In the movie, Evans said Holmes signed the POA document, giving him power to make business decisions for her. But does incarceration always trigger a POA to go into effect?

"Powers of attorney are governed by state law, so the rules on when a POA can take effect, and what it can authorize, vary from state to state," Taylor says.

There are different types of POAs. A durable POA goes into effect once signed and remains in effect unless the principal cancels it or dies. A limited POA gives authority for specific matters and can have time parameters for when it's valid. A springing POA, meanwhile, takes effect when a specific, predetermined event happens, such as mental incompetence.

• A durable POA goes into effect once signed and remains in effect unless the principal cancels it or dies.
• A limited POA gives authority for specific matters and can have time parameters for when it's valid.
• A springing POA takes effect when a specific, predetermined event happens, such as mental incompetence.

"Most of these 'springing' POAs are tied to incapacity, but many states let you name another trigger, such as incarceration, and designate a specific person to confirm in writing that it happened," Taylor says.

"In many cases, a durable POA that is effective immediately makes the most sense. This is because a springing document forces your agent to prove the trigger occurred, and banks can be slow to accept that proof exactly when someone needs to act."

3. Do you have any recourse if you believe your POA agent is acting against your best interests?

"An agent is a fiduciary. The law requires them to act loyally in your best interest, avoid conflicts of interest and keep records of every transaction," Taylor says.

If you're in this situation and are not incapacitated, you can revoke the POA. Taylor recommends doing so with a signed written revocation and notifying every institution that has a copy of the POA.

Assuming you aren't incapacitated, you also have the ability to sue for breach of fiduciary duty. "Serious misuse can be prosecuted as theft or financial exploitation," Taylor says.

4. What can you do if you think someone else's agent is misusing their powers?

The documentary makes it clear that Fielder doesn't trust what Evans is doing, although Holmes herself doesn't express any misgivings.

If you're a third-party observer and believe someone with POA is acting against the principal's best interests, there are some things you can do, although it somewhat depends on your relationship to the principal.

If you're a family member, heir, caregiver or government agency, you can petition a court to review the agent's conduct, Taylor explains. If a case involves an older or vulnerable adult, you can report concerns to Adult Protective Services.

Additionally, financial institutions can play a role. "Banks can refuse to honor a POA when they suspect abuse and report it, and brokerage firms can place temporary holds on suspicious withdrawals and trades for older or impaired clients," Taylor says.

"If the person still has capacity, though, a court will generally defer to their choices," she adds.

5. Should you assign your spouse or partner POA?

"A spouse is usually the right first choice since no one knows your finances and wishes better," Taylor said. "The weak spot is timing."

That's for a few reasons. First, you'll be aging together, so it's possible you'll need help at the same time and can't serve for each other. For this and many other reasons, it's recommended that you also name a backup POA.

Additionally, there's the possibility you divorce. "Many states end a spouse's authority automatically once a divorce is filed or finalized, but not all of them, so update your documents the day you separate," Taylor says.

Taylor also points out that Holmes and Evans aren't legally married, which means that if they were to break up, it would not automatically end the POA in the way a divorce would in many states. If Holmes wanted to revoke it, she would have to actively do so.

"In blended families, adding an adult child as co-agent, or requiring your spouse to report to one, heads off a lot of conflict later," Taylor says.

If you have a POA, you should review it "every few years and whenever you move," Taylor advises, so that it doesn't become out of date or invalidated by a state law.

Ultimately, Taylor says, "The best protection is built in before you sign: Name a successor agent and require the agent to report periodically to a second person."

It's important to remember that You Can See Everything is a movie constructed around the idea of suspicion. Don't let the film scare you off the idea of POAs: They help ensure that your finances and/or healthcare can be appropriately managed in the way in which you want them to be.

When it comes to Holmes and Evans in particular, we have to go back to that old adage: You never really know what's going on in someone's relationship ... even if you're a documentary crew filming their every waking moment.

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Stocks closed lower Friday as geopolitical uncertainty ramped up and Treasury yields and oil prices climbed. Market participants also looked ahead to next week's jam-packed earnings and economic calendars, which feature quarterly results from several mega caps, as well as the October Fed meeting.

At the close, the blue-chip Dow Jones Industrial Average was down 1.2% at 52,215, the broader S&P 500 was 0.5% lower at 7,623, and the tech-heavy Nasdaq Composite was off 0.2% at 25,955. The Dow managed to hold on for a weekly win, but the S&P 500 and Nasdaq were lower week over week.

Treasury yields resumed their climb on Friday. The yield on the 2-year (+5.1 basis points at 4.686%), 10-year (+4.8 bps, 5.001%) and 30-year (+4.2 bps, 5.329%) Treasuries were all higher at the close.

Oil prices rose, too, after Iran said it is prepared to attack should the U.S. and Israel resume strikes against Tehran. Front-month West Texas Intermediate crude futures climbed 3.8% to $103.27 per barrel, and are now up 14% for the month to date.

Despite higher yields and lofty energy prices, the Federal Reserve is widely expected to keep interest rates unchanged when its October meeting concludes next Wednesday afternoon.

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"Recent inflation readings have been on the warm side — especially at the producer level — but a wave of Fed speakers suggesting there was no rush to raise rates has provided a strong counterpoint," says BMO Chief Economist Douglas Porter, who adds that a "cooldown in the AI sector and milder job growth" have taken the heat off the central bank.

Still, he expects the Fed to raise interest rates in December and March.

American Express sinks on layoff news

In single-stock news, American Express (AXP) dropped 3.7%, making it the worst Dow Jones stock today. This came after the credit card giant said it is cutting 5% of its workforce to make it "leaner, more agile, and also to prepare for AI," as Chief Financial Officer Christophe Le Caillec told CNBC.

AXP had nearly 77,000 employees at the end of 2025, which suggests roughly 3,850 jobs will be eliminated. The company said it took a $336 million restructuring charge in Q3 as a result.

Still, American Express reported third-quarter earnings of $4.68 per share, up 13% year over year and more than analysts expected. Revenue of $20.1 billion also exceeded estimates. Additionally, AXP raised the low end of its full-year earnings-per-share guidance.

Wall Street remains upbeat toward the blue chip stock, too. Of the 30 analysts covering AXP who are tracked by S&P Global Market Intelligence, 10 say it's a Strong Buy, five have it at Buy and 15 rate it at Hold. This works out to a consensus Buy recommendation.

Bloom Energy sinks on cash flow concerns

Elsewhere on the earnings calendar, Bloom Energy (BE) slumped 11.2% after the manufacturer of fuel cells, which are used to power data centers, reported its third-quarter results.

While BE reported higher-than-expected third-quarter earnings and revenue and raised its full-year guidance, its free cash flow and operating cash flow were both negative.

"Bloom Energy is spending a lot of money striving to boost its fuel cell production fivefold, so some naysayers are worried about its cash burn," says Louis Navellier, InvestorPlace analyst and host of the Navellier Market Buzz. "I want you to know that companies like Bloom Energy have such massive order backlogs, so I disagree with criticisms of Bloom Energy's ramp-up."

Next week is a big one for earnings, too, with Alphabet (GOOGL, -1.2%), Caterpillar (CAT, -2.4%) and Amazon (AMZN, -1.0%) among those reporting.

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Stocks closed mostly lower Thursday as poorly received Magnificent 7 earnings and concerns about AI spending sparked a sell-off across the tech sector. Ahead of next week's Federal Reserve meeting, market participants are also worrying about how rising oil prices will impact inflation and interest rates.

At the close, the tech-heavy Nasdaq Composite was down 2.6% at 26,008 and the broader S&P 500 was 1.2% lower at 7,663, while the blue-chip Dow Jones Industrial Average ticked 0.02% higher to 52,867.

Oil prices climbed after President Donald Trump said late Wednesday that the U.S. is not currently negotiating with Iran to end the war in the Middle East. Front-month West Texas Intermediate crude futures rose 3% to $100.06 per barrel, and are now up nearly 11% month to date.

Meta sinks on free cash flow worries

Meta Platforms (META) was one of the biggest drags on the Nasdaq Thursday, with the Facebook parent sliding 7% after earnings, marking its worst day since July.

Meta's third-quarter revenue of $64.6 billion beat Wall Street's estimate, as did its fourth-quarter revenue forecast. But earnings of $3.83 per share fell short, and free cash flow turned negative as spending on its AI initiatives ramped up.

The company raised the low end of its full-year capex, now expecting to spend between $135 billion and $145 billion, compared to its previous outlook of $130 billion to $145 billion.

"In our view, Meta is entering a capex harvest cycle, with three years of investment in frontier AI models beginning to translate into both stronger near-term advertising performance and accelerating adoption of AI products," says UBS Global Research analyst Stephen Ju. "We believe Meta can further improve ad targeting and content recommendations through optimized versions of its Muse model, creating upside to our 2027 and 2028 revenue forecasts."

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Meta also said its board of directors approved the establishment of non-voting Class C shares, which will be publicly traded and distributed to those who own its Class A common stock and Class B super-voting shares.

The Class C shares will begin trading in January 2027, and the price of the Class A shares will "reflect the effect of a two-for-one stock split," says Meta.

Part of the reason Meta is creating the new Class C shares, the company explains, is to preserve CEO Mark Zuckerberg's voting control and ensure he remains in California to lead the company, both of which were at risk pending passage of California's proposed wealth tax in November. It will also help fund the company's AI expansion plans.

Tesla falls after earnings

Tesla (TSLA) was another Magnificent 7 stock that slumped after its late-Wednesday turn on the earnings calendar, with the electric vehicle (EV) maker shedding 3.1%.

The company reported third-quarter earnings of 48 cents per share on revenue of $28 billion, which was higher than analysts expected, but lower than the year prior.

TSLA also said operating expenses jumped 39% in Q3, which dragged on margins. Additionally, the company lowered its full-year capex forecast to $20 billion from $25 billion.

"With regard to a potential merger with SpaceX (SPCX, -9.1%), I think I said everything that should be said yesterday, tap-dancing through a minefield there," noted CEO Elon Musk on Tesla's earnings call. "And yes, that's it. "

Procter & Gamble has its best day in six years after earnings

Procter & Gamble (PG) found itself on the positive side of the ledger after earnings, rising 5.6% — the Dow Jones stock's best day since March 26, 2020, when it rose 6.4%, according to Morningstar.

The consumer products giant reported higher-than-expected fiscal 2027 first-quarter earnings and revenue, while volume growth jumped 2.4% year over year.

"We are getting the balance between pricing and product improvements, package improvements, claims, communication and retail execution right," Chief Financial Officer Andre Schulten said on the earnings call. "But it's also a very fragile balance that we want to make sure we don't compromise on, so we will price, and we will price with innovation, not jeopardizing the top-line momentum."

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As we approach the 2026 midterm elections on November 3, affordability is a major concern for many voters across the United States.

People already worry about rising grocery and housing costs, insurance premiums, utility bills, and gas prices. Meanwhile, homeowners, in particular, are also concerned about another expense that keeps climbing: property taxes.

The average property tax bill on a single-family home reached $4,427 last year, up 3% from the year before, according to real estate data firm ATTOM. For households already feeling squeezed, that bill adds to the cost of staying in a home they may have already spent years paying for.

Some potentially good news? Some states are responding. This November, voters in seven states will decide on various property tax measures designed to provide some relief. Here’s what you need to know before you vote.

2026 ballot measures related to property taxes

Some of the following measures would cut bills for qualifying homeowners. Others would slow how quickly property tax assessments can grow, expand exemptions for specific groups, or limit what the state can do in the future.

Florida: Property tax Amendment 3 bigger homestead exemption

Florida voters will weigh two property-tax measures on the November ballot.

Amendment 3 would raise the non-school homestead exemption to $150,000 in 2027 and $250,000 in 2028, then adjust it for inflation.

It would also cut the annual assessment cap on non-homestead property from 10% to 5% for non-school taxes, let local governments expand exemptions further, and limit how they spend property-tax revenue.

Residents who weren’t in Florida on December 31, 2026, would get the larger exemption starting in their fifth qualifying year.

Amendment 2 would exempt farm equipment and other tangible personal property used for agriculture or agritourism beginning in 2027.

Supporters say larger exemptions mean immediate savings for homeowners and farmers. Critics warn that lost local revenue could squeeze police, fire, and other services, or shift costs onto other taxpayers.

Wyoming: New exemption for primary residences

Wyoming’s Initiative 1 would exempt 50% of the assessed value of a qualifying primary residence.

• The exemption would cover the structure, not the land beneath it, and would have no value cap.
• Owners would need one year of Wyoming residency and six months of occupancy in the prior tax year.
• It would stack on a 2025 exemption covering 25% of the first $1 million in value for owner-occupied single-family homes.

Proponents say the measure offers broad relief to people who live in their homes year-round. Opponents argue that, without a cap, the biggest dollar savings would go to owners of the priciest homes, while counties and schools could face shortfalls.

Oklahoma: Tighter limits on property tax assessment increases

Oklahoma’s State Question 847 would slow how fast a property’s taxable value can rise.

• Current caps of 5% for most locally assessed real property and 3% for homestead and agricultural land would fall to 4% and 1.75% beginning in 2027.
• The full value freeze for eligible older adults age 65 and older would become income-based limits.
• Older adults with the lowest income would keep a zero-increase limit. Others in Oklahoma would face caps of up to 1.75%.

Supporters say tighter caps bring predictability when housing markets heat up. Critics note that caps limit increases in value (but not in bills), since local governments can still raise rates, and some seniors now protected by a full freeze could lose that certainty.

North Carolina: Capping local property tax increases

North Carolina voters will decide whether to amend the constitution to limit increases in local property tax levies.

• The property tax levy amendment doesn't set a specific percentage. Lawmakers would write the limits later and could allow exceptions.
• A cap on the state government’s overall levy doesn’t necessarily mean an individual bill cannot rise.

Supporters say a constitutional check would restrain local spending and give taxpayers certainty. Critics say the open-ended wording leaves key details to future legislators and could hamper growing communities’ ability to fund schools and services.

Louisiana: Five property tax measures

Louisiana has the longest ballot when it comes to property taxes, with measures generally falling into three categories: help for specific homeowners, changes to local rate-setting, and incentives to fix up neglected property.

• Amendment 1: Lets the surviving spouse of a deceased veteran with a service-connected disability transfer a homestead exemption to a new home one time.
• Amendment 6: Adds an exemption for homeowners 65 and older who already qualify for the income-based assessment freeze. It rises with age to $30,000 in assessed value at 81 and older, with local approval required.
• Amendment 9: Raises that freeze’s income limit from $100,000 to $150,000, with inflation adjustments starting in tax year 2028.
• Amendment 2: Lets taxing authorities that have levied below their maximum raise rates toward a rate authorized in a prior year after reassessments.
• Amendment 10: Allows local exemptions for rehabilitated blighted or derelict properties.

Supporters call the first three targeted help for people on fixed incomes, while critics note they benefit only those who qualify and can reduce local revenue. Additionally, some backers say Amendment 2 gives local governments flexibility, and Amendment 10 revives neighborhoods.

But some opponents fear higher tax rates and short-term revenue losses with some of the measures.

Georgia: More land eligible for preferential tax treatment

Georgia’s Amendment 1 would double the maximum acreage one owner can enroll in the Conservation Use Valuation Assessment program, from 2,000 to 4,000 acres.

• The program taxes qualifying agricultural, timber, and conservation land on its current-use value rather than its market value.
• Owners must commit to keeping the land in eligible use. Georgia homeowners generally wouldn’t be affected.

Supporters say the change helps large farms and timber operations stay in business and keeps working land from being sold for development. Critics argue it shifts more of the tax burden onto other owners and mainly benefits large landholders.

Tennessee: Amendment 2 constitutional ban on a state property tax

Tennessee’s Amendment 2 would prohibit the Legislature from imposing a statewide property tax on real, personal, or mixed property.

• Notably, Tennessee has no such tax today, so the amendment wouldn't change current bills.
• Local property taxes levied by counties and cities would stay as they are.

Supporters see a permanent safeguard against a future tax increase. Critics say it ties lawmakers’ hands for a tool they might not use.

Property tax: What to know before voting

Property tax measures offer relief in different ways, and the details determine who benefits.

• Homestead exemptions reduce the portion of a primary residence’s value subject to tax.
• Assessment caps limit how quickly taxable value can rise, but don’t necessarily cap the bill.
• Senior exemptions and freezes often depend on age, income, and residency.
• Limits on local levies restrict how much a government can raise overall, with no guarantee of a lower bill for every homeowner.
• Agricultural and other targeted exemptions mostly benefit qualifying property owners, not homeowners across the board.

Before casting your ballot, make sure you know who qualifies for each measure, when the new rules take effect, and how a measure could affect your home’s taxable value.

It's also important to consider how or whether a measure might affect your bottom line in the near term or further down the road.

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If you are a homeowner, you've already noticed your home insurance premiums aren't just creeping up. For many, they're soaring – up nearly 37% nationwide over the last decade, according to data from the Federal Reserve. Meanwhile, car insurance premiums have jumped over 50% in the same time period.

The impact has hit some states harder than others, and a study published this week by Bloomberg Intelligence found that the problem is so widespread that most homeowners are now spending more on insurance than they are on property taxes.

Between higher mortgage rates and higher home prices (which come with higher property taxes), homeowners in today's market are already feeling squeezed. Tacking on soaring insurance rates is just one more thing inflating your monthly escrow payment. Here's what the study found and what you can do about it.

Insurance premiums are a bigger burden than property taxes for most homeowners

In October, the average cost of home insurance nationwide hit $2,808 per year, according to Insurify. But some states are seeing even more expensive home insurance premiums. Nebraskans, for example, have seen rates soar 79% over the last 10 years, according to the Bloomberg analysis.

Among the major reasons cited for the historically high rates are increased climate change-related risks as well as rising home values and the rising cost of repairs. Similar reasons are cited for car insurance, which the study also tracked.

When the two are bundled together, the total cost amounts to a substantially higher bill than property taxes for homeowners in 75% of counties nationwide. On average, Bloomberg found that home insurance alone is about 14% more expensive than property taxes in these counties. When you add in car insurance, the average price difference hits 30%.

In some regions, particularly in the Southeast, insurance premiums can be as much as four times higher than a typical property tax bill.

Ways to lower your insurance premiums

Seeing headlines like this at a time when just about every other part of your budget is also hurting from inflation is hard. While you may not be able to completely reverse the skyrocketing prices you're seeing, there are some steps you can take to push the rates you pay back down.

Before you buy a house

If you don't own a home yet and this news is making you reconsider whether you're ready to take the leap, here are some tips to try before the move to minimize your future monthly payments:

• Buy less house. While a big house sounds nice, more house means more coverage requirements. If you're willing to make a slight tradeoff – even downsizing your search from, say, a four-bedroom to a three-bedroom or the same room count but in a smaller footprint – you'll be rewarded with lower premiums.
• Look for newer construction. This strategy can be tricky to balance. New construction is typically cheaper to insure, but the home price might be higher than something a little older. It's probably not worth buying a more expensive home purely in hopes of seeing a lower insurance bill. But if you're deciding between two homes at a similar price point, the newer one might come with slightly lower rates.
• Check the flood hazard zone. The FEMA flood maps are an imperfect tool for evaluating a home's actual flood risk. But insurance companies do use those flood zone designations when setting rates. Choosing a home with a lower risk according to the map can lead to savings on insurance.
• Find the closest fire station. A home that's minutes away from a fire station will cost less to insure than one that's further out. Spotting a fire hydrant on the street is also a good sign that an insurer will view this as a lower-risk property.
• Skip the backyard pool. Alright, if your heart is set on having your own pool, get it. But know that the pool will mean a higher insurance premium. They're seen as a liability hazard by most insurers. So if it isn't on your "must-have" list, it's better to skip the pool and use your premium savings (and pool maintenance savings) to instead get a membership to a gym that has a pool or a local community pool.

If you're already a homeowner

For those who already own a home, you might feel like your options are limited. Moving into something cheaper to insure might be out of the question if you locked in an interest rate far lower than what's available today. But you do still have some tricks up your sleeve to tamp that premium back down:

• Replace your aging roof and systems. If your home is older and in need of a new HVAC system or new roof, making those upgrades (and then telling your insurer about it) can lead to serious savings. The same goes for older plumbing and wiring – though those can be more costly and difficult to replace if you're not already planning a major renovation.
• Do some DIY fireproofing. For those in California or other places with a higher fire risk, taking steps to fireproof your home can result in lower premiums. In some cases, the savings could be in the thousands if the fireproofing is enough to get you off the FAIR plan and onto a standard home insurance policy. If that's your goal, call your insurer ahead of time and find out what kind of fireproofing measures you should do to make the switch.
• Pay your policy in full up front. This works for both home and car insurance. Many insurers offer a paid-in-full discount that can knock a couple hundred bucks off of your bill. It's not exactly a windfall, but it's an easy way to trim your costs down a bit.
• Raise your deductible. If you have a healthy emergency fund, it can be worth leveraging that to lower your premiums. A higher deductible means you're agreeing to shoulder more of the costs of any covered damages. But if your emergency fund can bear the deductible amount, that tradeoff could shave another couple hundred bucks off of your bill.
• Shop your insurance ahead of every renewal. Switching home insurance won't always lead to savings, but it often will. It only takes a few minutes to compare quotes online and could end up saving you hundreds every year. If you don't find a cheaper quote, at least you will know for sure that your current rate is the best available.

Start the hunt for a better rate with our home insurance comparison tool below:

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All three main equity indexes were lifted by general optimism about the AI revolution on Wednesday, with incoming data showing an actual return on investment for one of its major players. Whether that trend persists is the controlling question for markets, with more earnings and guidance from the new economy's leaders on the immediate horizon.

By the closing bell, the tech-heavy Nasdaq Composite was up 1.1% at 26,702, the broad-based S&P 500 had added 0.6% to 7,757, and the blue-chip Dow Jones Industrial Average was higher by 0.7% at 52,856.

Price action in the bond market was relatively muted, with the 2-year Treasury yield up 2.3 basis points to 4.81%. Yields on the 10-year (+0.6, 5.123%) and the 30-year (-1.2 bps, 5.413%) Treasuries drifted mostly sideways.

"The recent volatility in the AI trade may have rattled the market," observes Morgan Stanley Wealth Management Portfolio Manager Daniel Skelly, "but it's arguably a healthy development, especially given a backdrop of solid growth and strong earnings."

Skelly acknowledges that concern about spending is "merited given the boom-bust nature of some previous US innovation episodes." At the same time, he concludes, "The long-term AI capex cycle remains intact and should continue to favor large players with strong balance sheets."

Why a SpaceX-Tesla merger is only a matter of time

SpaceX (SPCX, +7.8%) announced its presence on the earnings calendar with authority after the closing bell on Tuesday, including a big bottom-line beat driven by rapid growth for its Super Intelligence and Starlink segments.

But the bigger news might be what CEO Elon Musk said about the biggest potential M&A transaction in stock market history, a long-rumored tie-up between SpaceX and Tesla (TSLA, +3.4%).

According to Musk, the boards of both SpaceX and Tesla have formed special committees to talk about a merger between the two companies.

"I do think there's a lot of merit to combining the companies," Musk said during a conference call to discuss SpaceX results. "There's a lot to be gained from cooperating on developing superintelligence software."

Nobody knows anything, especially about the future. But even a limited data set indicates the probability the SPCX and TSLA boards see the situation the same way their CEO sees it is a lot closer to 100% than it is to 0%.

What that deal means for AT&T

AT&T (T, -6.5%) also reported expectations-beating top- and bottom-line results for its third quarter. Management raised its full-year earnings guidance, and AT&T is accelerating its stock buyback program, too.

Revenue was up 5.3% year over year to $32.3 billion, vs a FactSet-compiled consensus estimate of $31.7 billion. Earnings per share came in at 65 cents vs estimates of 60 cents. AT&T said 2026 EPS will be $2.40, up from a range of $2.25 to $2.35 offered in July.

"The accelerated growth we delivered this quarter shows our structural advantages to lead the next era of connectivity," CEO John Stankey said in a statement. "We are accelerating the pace of our planned share repurchases this year to approximately $10 billion, reflecting our confidence in our market position."

But the blue-chip dividend stock still fell sharply on Wednesday. AT&T reported 379,000 new postpaid subscribers, missing a consensus forecast for 379,300. That's also down from 432,000 new adds in the second quarter.

Postpaid subscribers generate long-term recurring revenue. Deterioration here is an indicator of competitive pressures from existing market participants such as Verizon Communications (VZ, -2.2%) and T-Mobile US (TMUS, -2.5%).

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Despite what Stankey said about its structural advantages and its position in this emerging era of connectivity, markets are also pricing the potential impact on the prevailing market-share pie of new service providers such as SpaceX.

T (down 4.7% through October 20 vs -0.7% for the S&P 500), VZ (-2.3%) and TMUS (-7.9%) have all suffered since October 8, when SpaceX accelerated its plans to launch a consumer wireless telecom business with an $8 billion spectrum purchase that will allow Starlink to compete with the incumbents.

Meta's latest muse

Tesla and fellow Magnificent 7 stock Meta Platforms (META, +0.5%) are reporting third-quarter financial and operating results after the closing bell. Independent tech analyst Luke Lango is particularly bullish on the latter.

"Meta heads into earnings as a frontier AI contender, not just an ad company, and the market hasn't fully priced that shift. The core business is humming, and we expect revenue to clear the $63.3 billion consensus by $1 billion or more on growth north of 20%, a pace few mega caps can touch."

According to Lango, Meta's brand-new Muse is the real story after the AI agent "topped 10 million downloads in about six weeks, a launch pace only a dozen apps have ever hit."

The analyst cites SpaceX's "blowout" earnings as evidence that agents and the computing power to support them "are already making real money." As Lango sees it, this totally reframes the capex debate. "When compute is this scarce and this valuable," he writes, "a bigger spending plan isn't recklessness, it's a land grab."

Lango is looking for Mark Zuckerberg's outfit to post strong ad numbers and "hard" Muse metrics. "At roughly 20 times next year's earnings," the analyst concludes, "Meta is one of the cheapest ways to own the AI agent era."

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

Launching data centers into space is a moonshot. It’s hard to see the tech expanding beyond niche uses, even given a decade or more to develop. But big bets and upcoming activity are worth watching.

Start with Google recently launching its first test computer chips, known as Tensor Processing Units (TPUs), to see how they handle the harsh conditions of space, such as the vibrations of spaceflight, radiation and extreme temperatures. Google is working with satellite firm Planet to see if AI chips survive space phenomena that can "wreak havoc on electronics."

Others working on the tech include Starcloud, K2 Space, Blue Origin, Axiom Space and Cowboy Space. Nvidia, too, has a specific chip design for the stress of orbit. Before the recent Google launch, there were others who had similar tests.

SpaceX will dominate the field

SpaceX’s long-term plans overshadow all the rest: Annually launching thousands of data centers that use up to 100 gigawatts of power. (The largest data center on Earth, owned by SpaceX, uses about 1 gigawatt of power.) The vertically integrated juggernaut has a massive edge by controlling its own rocket and satellite-manufacturing facility.

"We believe orbital AI compute is an incredibly difficult technical challenge that only we can solve at scale in the near term," SpaceX said in its IPO prospectus.

CEO Elon Musk says SpaceX’s orbital data centers will start launching in 2027 and that the company has plans to build a network of up to 1 million orbital data centers. The satellites will be 100 feet high with a 250-foot wingspan, covered in solar panels and an 1,800-square-foot radiator with liquid cooling. For now, SpaceX is using Nvidia chips, but the space giant eventually wants to build its own chips at its Terafab facility in Texas.

AI data centers could come to dominate the payloads of its rockets, just as Starlink satellites have. In fact, SpaceX’s orbital data centers are the only payload that could even come close to creating the demand for hourly Starship launches, another of Musk’s goals.

The long list of technical challenges

Why go to space? To bypass the power and physical constraints on Earth. Sunlight is unlimited and five times more powerful in space, a big draw for power-hungry AI computing. Plus, leaving our atmosphere makes activist opposition, pollution concerns and other issues vanish.

But there’s a long list of obstacles to overcome. In addition to spaceflight vibration, radiation and extreme temperatures, the vacuum of space has no airflow, so intense heat from AI chips needs to be radiated with large metal panels. Many consider that a major challenge, but Musk isn’t fazed.

"For some reason there's been a bizarre debate about radiators in space," he said at a SpaceX presentation this year. "It's safe to say, SpaceX knows how to do heat rejection in space, with 10,000 satellites in orbit."

Orbital data centers also need to be connected to each other by high-bandwidth lasers and send data speedily back to Earth. Data delays would seriously limit the usefulness of many applications. Meanwhile, chip failures and other technical issues may have to be fixed by robots in space. And the chips will have to be replaced every 5 years or so, if not more often because of the harsh conditions.

After you solve the technical issues, the business model looks brutal when compared with traditional data centers on land. Advocates counter that they see launch costs plummeting over the next decade-plus, courtesy of SpaceX’s supersized Starship, as the chips and satellite tech drastically improve and demand for AI zooms ahead.

Google has admitted that its plans rely on SpaceX vastly driving down the cost of launching data centers. Google sees this possibly happening by 2035, if Starship takes flight nearly 200 times per year with packed payloads. And if SpaceX passes cost savings in its launches to its outside customers.

In a white paper, Starcloud argues that if launch costs fall and orbital data centers are scaled up, space systems will have lower operating costs than the hulking chip-packed facilities in Northern Virginia, Texas and elsewhere. That stems from lower energy and cooling costs, along with ditching the permitting challenges and physical constraints on land.

Breakthroughs are on the way

Expect breakthroughs in coming years, proving the tech is viable, if exceedingly costly. But don’t expect a viable alternative to traditional data centers on Earth anytime soon, even with serious power constraints and rising opposition to data centers.

SpaceX bets that a huge, profitable business emerges someday. "Over the long term, however, we expect Earth’s finite resources will not be able to sustain the immense computational demands of advanced AI models," according to the company’s prospectus. Still, SpaceX notes the risk that even if space is commercially viable, a serious slowdown in AI’s growth could make terrestrial data centers sufficient to handle future computing needs.

If commercial customers do emerge in the 2030s, the likeliest buyers are governments and the military, which would be more willing to pay a premium for research or security.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Stocks finished mostly higher Tuesday as long-term Treasury yields retreated and oil prices eased back. A round of well-received earnings reports helped offset disappointing housing data, with more corporate reports due out after tonight's close — including results from mega caps Netflix (NFLX, -1.7%) and SpaceX (SPCX, -0.1%).

At the end of Tuesday's session, the blue-chip Dow Jones Industrial Average was up 1% at 52,495, the broader S&P 500 was 0.3% higher at 7,712, and the tech-heavy Nasdaq Composite was marginally lower at 26,424.

Yields on the 10-year (-2.1 basis points to 5.115%) and 30-year (-5 bps to 5.423%) Treasury notes helped lift the main equity benchmarks, as did falling oil prices. Front-month West Texas Intermediate crude futures shed 0.9% to $102.75 per barrel, though they remain nearly 14% higher month to date.

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3M jumps on Amazon data center deal

3M (MMM) was the best Dow Jones stock on Tuesday, rising 5.8% for its best day since July, after the industrial conglomerate's beat-and-raise quarter.

In Q3, the company said earnings grew 14.2% year over year to $2.50 per share — more than Wall Street expected — while revenue was up 4.2% to $6.6 billion, slightly below analysts' estimates. 3M also expects full-year earnings per share of $9.10 to $9.15, up from its previous forecast of $8.80 to $8.95.

While earnings were impressive, Wall Street also cheered a separate announcement from 3M regarding "an expanded strategic commercial relationship with Amazon (AMZN, +0.07%) to deploy and scale 3M's optical connectivity and other Data Center related products."

According to a regulatory filing (pdf), the deal gives Amazon the option to purchase 3.2 million MMM shares over the next seven years, contingent upon several milestones, including $6 billion in sales of 3M's optical connectivity and other data center-related products.

Ally Financial hikes its dividend by 17%

Elsewhere on the earnings calendar, Ally Financial (ALLY) rose 1.0% after the top online bank reported third-quarter earnings of $1.34 per share, up 16% year over year, on revenue of $2.3 billion (+9% YoY). The results surpassed Wall Street's expectations.

Separately, the financial firm said its board of directors approved a 17% increase to its quarterly dividend. This marks the first time since late 2021 that Ally Financial hiked its payout.

Braze soars 52% on Salesforce buyout

In non-earnings news, Braze (BRZE) shares shot up 51.7% Tuesday on news that Salesforce (CRM, -0.01%) will buy the customer engagement platform in an all-cash deal valued at roughly $5.66 billion.

Salesforce says the transaction is expected to close in fiscal 2028, and upon completion, "Braze's real-time engagement and AI decisioning capabilities are expected to complement all four layers of Salesforce's architecture — Data 360, Customer 360, Agentforce, and SIForce."

Earlier this month, BofA Securities analyst Tal Liani double-upgraded Salesforce to Buy from Underperform (the equivalent of Sell).

"Our prior concern centered on AI-driven disintermediation," Liani wrote in a note about the blue chip stock. "However, conversations with CIOs and other market participants suggest that large enterprises (more than small-to-medium-sized businesses) are unlikely to replace platforms that house their business logic, data, workflows and compliance frameworks."

And AI, he adds, "should deepen dependence on these platforms." He believes that Salesforce has a credible AI strategy and is poised for strong free cash flow generation.

Housing starts, pending home sales fall short

In economic news, data from the Census Bureau showed building permits slipped 0.2% from August to September to a seasonally adjusted 1.4 million. Housing starts, meanwhile, plunged 5.2% month over month in September to 1.2 million.

"The affordability challenges hurting transaction momentum have builders significantly slowing their construction pace, as this morning's September housing starts data posted the second-worst number since the pandemic recession in 2020," says José Torres, senior economist at Interactive Brokers.

Building permits, he adds, were "less dim," with construction companies focused "on apartment rentals rather than single-family projects."

Separate data from the National Association of Realtors showed that pending home sales slumped 7.3% from August to September, and were down 11.3% year over year. Torres points to "elevated mortgage rates and lofty valuations," which are offsetting "the positive impacts of buoyant stock market performance, healthy hiring and subdued unemployment."

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

As Anthropic and OpenAI dominate the headlines, plenty of younger AI companies are nipping at their heels.

Those companies are still able to raise gobs of cash from venture capitalists and other investors at ever-higher valuations (despite concerns of overspending and the risk of an AI bubble) as investor enthusiasm for AI outruns its immediate business prospects.

Most of the money is being used to buy computing power for start-ups’ own data centers or outside cloud computing. Ultimately, that means the money fuels higher sales of Nvidia graphics processing units, as well as central processing units and memory.

Anthropic is valued at $1.2 trillion, followed by OpenAI’s $852 billion. Both Anthropic and OpenAI expect to go public at far higher valuations.

Other top companies are Databricks, Cognition, Ramp, Thinking Machines Lab, Project Prometheus, Safe Superintelligence, VAST Data, Perplexity and Sierra. China’s ByteDance, the owner of TikTok, has a valuation of $480 billion. China’s DeepSeek is valued at $59 billion.

Private valuations are a moving target. These days, the target is moving steadily higher, as new funding rounds from eager investors push valuations up.

Sources: CB Insights, “State of AI: Q3 2025”; company press releases; news reports

Some highly valued start-ups have tiny staffs and no product or revenue, at least not yet, with investors betting big on the founders as visionaries. Others have soaring sales, as is the case with leaders Anthropic and OpenAI, but are spending even faster than revenue is rising.

The different solutions highlight the varied AI ecosystem. Databricks is a cloud platform for massive amounts of data and analytics, for example. Project Prometheus, which is backed by Amazon founder Jeff Bezos, focuses on robotics and other physical hardware. Perplexity has a free AI-powered search engine.

Investors are betting that there’s room for many winners in the AI race.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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As many people in the U.S. are dealing with high prices for everyday expenses, the growing gap between wealthy households and everyone else is a topic of debate. Now, United Airlines CEO Scott Kirby is weighing in, calling for a national wealth tax and inheritance taxes that could approach 100% for some.

In an interview with The New York Times published October 18, Kirby was asked about declining public trust in corporate executives. He responded:

"Wealth inequality has become a danger to our society, and we need to address that. We should have a national wealth tax — it won't work by state because people will just move. And I think we should have inheritance taxes that get close to 100 percent at some level. I would pay them."

Kirby, who is reportedly worth over $125 million, didn't offer a detailed plan for how new taxes would work. But his comments raise interesting questions about tax fairness in the United States.

The Center for American Progress reports that the wealth gap is the widest it's been in 30 years, with the top 1% holding nearly 32% of the nation's total wealth (roughly $55 trillion in assets). Meanwhile, the bottom 50% holds only about 2.5% of U.S. wealth.

To better understand what a national wealth tax could mean, it helps to look at what the U.S. tax system currently does and doesn't tax.

Types of income the IRS taxes

In the U.S., many types of income are taxable, including wages and certain investment gains. But the IRS generally doesn't tax accumulated wealth.

• For example, if someone's stock portfolio increases in value, they generally don't owe capital gains tax on those gains until they sell the investments, though other tax rules may apply.
• A national wealth tax, if ever approved, would require people to pay tax on the value of their assets even if they hadn't sold anything or received additional income.

However, the U.S. government can tax some wealth transferred after death. When applicable, the estate, not the heir, generally pays the federal estate tax, which tops out at 40%. But because the exclusion is so high, many estates owe no federal estate tax.

For people who die in 2026, the federal lifetime estate tax exemption is $15 million per person ($30 million for couples).

Also worth noting: Some states have their own estate taxes, with different rules and exemptions. For instance, five states — Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania — tax certain inheritances.

The takeaway? Under current federal law, inheriting money doesn't automatically mean owing federal income tax or inheritance tax. The outcome depends on the asset type, the estate's circumstances, and the state involved.

What would a wealth tax change?

A wealth tax would generally target a person's net worth — generally, the value of their assets minus their debts at a given time — rather than the income they earn in a year.

Imagine someone owns $50 million in investments and other assets and has $5 million in debt. Their net worth would be $45 million. Under a hypothetical wealth tax on net worth above $20 million, some of that wealth could be subject to tax even if the person earned relatively little income that year.

Of course, the details would matter. Lawmakers would need to decide which assets count, how to value them, what threshold triggers the tax, and how often to collect it. Valuing private businesses, art, and other assets that don't trade on public markets could be especially complicated.

Interestingly, and as Kiplinger has reported, California voters will weigh in on similar questions this November.

• Proposition 40, on the November 3 midterm elections ballot, would impose a one-time tax of up to 5% on certain covered assets held by billionaires who were California residents on January 1, 2026.
• Covered assets would include businesses, securities, art, and intellectual property.
• Real estate, pensions, and some retirement accounts would generally be excluded.

Advocates say the measure is intended to raise money primarily for healthcare, with additional funding for education and food assistance. Estimates suggest it could generate tens of billions of dollars in temporary revenue over several years.

Opponents argue that the billionaire's tax could drive wealthy residents away and weaken state finances over time. A state analysis estimates that tax flight could reduce annual income tax revenue from billionaires by less than $1 billion.

The California proposal is a one-time state tax aimed at billionaires, not a recurring "wealth tax." But it highlights some of the same issues lawmakers would face in designing a broader national levy, including which assets to include, how to value them, and how to limit opportunities to avoid the tax.

Meanwhile, other states are debating tax changes aimed at high earners, though these proposals concern income rather than total wealth.

• Colorado voters will consider Amendment 87, which would replace the state's flat 4.4% income tax with graduated rates, including higher rates for people earning more than $500,000.
• Washington state voters, meanwhile, will decide whether to repeal a new 9.9% tax on annual income above $1 million.

The difference between wealth taxes and inheritance tax

It's also important to note that a wealth tax and an inheritance tax target different things. A wealth tax would generally apply to assets a person owns, while an inheritance tax applies to money or property someone receives from a person who has passed away.

An inheritance tax is also different from an estate tax. An estate tax is generally assessed on the estate before assets are distributed to beneficiaries. An inheritance tax (when applicable) is imposed on the recipient.

In any case, a tax rate approaching 100%, as suggested by Kirby, on very large inheritances would represent a major change from current federal law.

Supporters of higher inheritance taxes often argue that taxing large transfers of wealth could help reduce wealth concentration and raise money for public services. Critics counter that high rates could make it harder to pass family businesses or other assets to the next generation, potentially forcing heirs to sell assets to cover a tax bill.

The effects would depend heavily on how any new tax would be designed, including the size of the exemption, the rate schedule, and how assets such as closely held businesses would be treated.

And of course, there's politics: passing a national wealth tax would be difficult in a deeply divided Congress.

What new taxes mean for your financial plan

For now, Kirby's comments don't change the tax rules for your investments or inheritance. Most families also don't need to worry about the federal estate tax.

But if you're concerned about tax liability, don't overlook state taxes. Some states have estate tax exemptions well below the federal limit, and as previously mentioned, certain states tax some inheritances and estates.

As a result, depending on where you live and where the person leaving you assets lived, state taxes could affect how much you or your heirs ultimately keep.

Consult a trusted tax advisor or certified financial planner who knows your financial circumstances.

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The most recent CPI report shows inflation reached 3.7% year over year in September. That's up from 2.4% in February, when the war in Iran began. While consumers have noticed the impact of the Iran war most when it comes to rising gas prices, the effects have been felt in other areas of household budgets as well, from airfare to food.

That's driven primarily by the rising oil prices resulting from the Strait of Hormuz closure. Brent crude oil was selling for $72.87 per barrel on the eve of the war (February 27). By March 20, it had soared above $112. After briefly dipping back down to its pre-war prices in July, it quickly shot back into the triple digits by August and is now trading above $109 in October.

As we near the end of the year and the war drags on, the Iran conflict continues to have a ripple effect on the economy. But just how much have prices changed for Americans since the war began on February 28? And how much longer should you expect costs to remain high? Here's a look at the data to help you anticipate where your budget is being hit hardest.

Gasoline and diesel skyrocketed since the start of war in Iran

Gas prices are up more than 46% since the war began, with the national average jumping from $2.93 on February 23 to $4.29 on October 19, according to AAA. That makes sense, as gas prices are determined primarily by crude oil prices, which make up over half the cost you see at the pump.

That also means that the price you pay can rise and fall quickly in response to changing oil prices. So this is one cost that could come down relatively fast if the conflict were to end.

Diesel prices have also skyrocketed, jumping 66% in the same time period. Even if you don't own any diesel-powered vehicles or equipment, nearly 80% of U.S. farm products will end up on a diesel-powered truck at some point in their journey from the farm to your table.

Likewise, the vast majority of the products you buy are transported on diesel-powered trucks. So nearly everything you buy is going to be impacted to some degree by those soaring diesel prices.

Heating oil and natural gas prices increased since the war in Iran

As we head into winter, you'll also start to see the impact of the war on your heating bill. Home heating oil prices have more than doubled from January to September of this year, soaring 128% since the beginning of the year, according to data from the Federal Reserve.

Similarly, residential natural gas prices jumped 77% from February to July, the most recent month for which data is available from the U.S. Energy Information Administration. Granted, this follows a similar trend of seasonal natural gas price fluctuations in previous years, so it remains to be seen whether prices will fall as they typically do going into fall and winter.

With those utility bill spikes in mind, now is a good time to compare your current rates for electricity and gas and make a plan for heating your home this winter. For example, if your rates have risen dramatically, this could be a good year to invest in an electric heater that you can move from room to room with you rather than heating the entire house.

You should also take this time to check in on your setup with your current provider. It may be worth shopping around and seeing what companies' fixed-rate price options are, although it's hard to predict if locking in a rate will be worth it since we don't know what will happen with the conflict.

Grocery prices changes since the war in Iran

The Bureau of Labor Statistics food at home price index has only shown a slight uptick so far, rising 1.1% since the start of the war. Overall, it's up 5.2% since Donald Trump took office in January 2024 and nearly 32% since the start of the pandemic in 2020.

Grocery prices have been an increasing strain on American wallets for years now, and the impact of the Iran war is likely not fully accounted for in today's costs yet, meaning more inflation is likely to come.

Why will the Iran war impact your grocery bill? Fertilizer, pesticides and feed are all dependent on either materials derived from petrochemicals (like urea in fertilizer) or supply chains that require transit through the Strait of Hormuz. Fertilizer alone accounts for roughly 30% of the cost of producing staple crops like corn and wheat. In turn, animal feed, which is typically made up of corn or soybeans, represents at least 60% of livestock production costs.

That means every item on your plate is being impacted by rising oil prices and the closure of the strait. Tack on those soaring diesel prices when it comes time to transport that food to your nearest grocery store, and you're looking at even higher costs.

Between rising fertilizer and diesel prices, S&P Global anticipates just about every major food product could see even higher price hikes going into next year as the crops treated with this year's more expensive fertilizers become ready to harvest.

Airfare and other travel has gotten more expensive

Jet fuel prices have nearly doubled since February, reaching $192.44 per barrel this month, according to the International Air Transport Association (IATA). The IATA estimates that jet fuel alone accounts for about 30% of an airline's operating costs.

For consumers, that means rising ticket prices. The consumer price index for airfares shows ticket prices rose nearly 17% from January to September. The airfare price index is now even higher than it was after the oil price shock of 2022 following the Russian invasion of Ukraine.

It might not just be your plane ticket that gets more expensive, either. Uber and Lyft have in the past added temporary fuel surcharges to the price of a ride when gas prices soar dramatically. While neither rideshare service has announced such a surcharge this fall, it is something to watch for as fuel prices remain elevated.

Brace for prices to remain high even after the war

While the price of oil can rise and fall quickly on each development in the war, the downstream effects on prices take a little longer to show up and longer to level out again. So, even if the U.S. and Iran strike a deal tomorrow, you should still budget for conflict-related inflation to continue for at least another year or two.

According to the Federal Reserve, every permanent 10% increase in the price of Brent crude oil leads to a 0.4% rise in the consumer price index. This "pass-through effect," as the Federal Reserve calls it, can be slow to materialize, but also long-lasting. While some costs might be quicker to come back down – like gas prices – others will likely take longer to stabilize, like food prices.

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Chip stocks caught bids for the first time in 10 trading sessions on Monday, though the main equity indexes were mixed as Treasury yields resumed their climb. It's relatively quiet as far as incoming economic data this week. But markets have plenty of fresh information to consider, with two of the Magnificent 7 stocks set to report third-quarter operating and financial numbers.

At the closing bell, the tech-heavy Nasdaq Composite was up 1.1% at 26,430, and the broad-based S&P 500 had added 0.4% to 7,690. But the blue-chip Dow Jones Industrial Average was lower by 0.07% at 51,966.

Consumer discretionary stocks and tech stocks posted outsized gains amid a relatively narrow rally, while the VanEck Semiconductor ETF (SMH, +1.6%) posted a positive intraday return for the first time since October 5.

Nvidia (NVDA, +1.4%) was well in the green, while fellow Magnificent 7 stocks Meta Platforms (META, -0.6%) and Tesla (TSLA, +3.8%) prepare to offer the market the first look at the trend-setting group's recent results after the closing bell on Wednesday.

"Despite the pullback in the AI trade, the S&P 500 ended last week only 2% below its all-time high," E*TRADE from Morgan Stanley Managing Director Chris Larkin observes. "With a light economic calendar this week, traders should be more focused on earnings, but as has been the case for the past few weeks, oil prices and Treasury yields will likely play a major role in market sentiment."

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The 2-year Treasury yield was up 3.6 basis points to 4.772%, while yields on the 10-year (+4.4 bps, 5.142%) and the 30-year (+3.9 bps, 5.476%) also popped again on Monday. The front-month West Texas Intermediate crude oil futures contract, meanwhile, declined by 0.7% to $98.38 per barrel from $101.41 on Friday.

Like Larkin, Louis Navellier of Navellier & Associates would rather focus on earnings: "I am expecting 33% average third-quarter earnings growth for the S&P 500. It is literally impossible to be bearish in the midst of such stunning earnings announcements, so please enjoy the ride."

Why AMZN is a "Top Pick"

Amazon (AMZN, +5.0%) was No. 1 among the 30 Dow Jones stocks on Monday after Morgan Stanley named it a "Top Pick" based on a favorable risk-reward profile, as well as five catalysts for as much as 40% upside from its closing price on Friday.

According to analyst Brian Nowak, Amazon Web Services will continue to deliver outsize top-line growth on its way to $1 trillion in revenue. AWS growth will, in turn, support earnings power. Its Bedrock service is well-placed to drive generative AI across the economy and is "a potential multiple expander."

Amazon also enjoys competitive advantages when it comes to agentic AI. And the e-commerce giant is emerging as a physical AI winner, too, with efficient adoption of robotics at its fulfillment centers.

Nowak reiterated his Overweight (Buy) rating and raised his 12-month target price from $335 to $350, noting a three-to-one risk-reward ratio based on a downside "bear skew" to $220.

The analyst also cites the bigger top line for AWS, as well as Amazon's "ability to operate as a 'rule of 90' company," which means the sum of its annual revenue growth rate and its profit margin is equal to or greater than 90%.

INTC gets an upgrade

Intel (INTC, +2.4%) traded up to $142.35 intraday and closed at $139.63 on June 30. The semiconductor stock closed at $89.85 on Friday, almost 40% from its recent highs.

That was enough for J.P. Morgan analyst Harlan Sur to upgrade the chipmaker to Neutral (Hold) from Underperform (Sell). The analyst maintained his 12-month target price of $85, as the risk-reward for INTC now "is much more balanced."

Sur notes concerns about the sustainability of AI infrastructure spending, but he says "increasing agentic AI workloads (CPU intensive) and a very tight supply chain for leading edge silicon should drive continued positive" earnings revisions when management reports third-quarter results on October 29 and through 2027.

According to S&P Global, 15 Wall Street analysts have Buy ratings on INTC, vs 33 who rate the AI stock a Hold, and now just one who says it's a Sell. The average 12-month target price is $118.05.

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

There’s no shortage of comments from tech leaders about the transformative potential of artificial intelligence. But with AI spending surpassing the level of previous major infrastructure projects, including railroads, electricity and the internet, it’s become more important to consider how the biggest spenders understand the AI buildout.

Here’s what tech executives have said about the risks in interviews, panels, earnings calls and shareholder letters. (Some quotes have been lightly edited for concision and readability.)

On the risk of a bubble

Dario Amodei, CEO of Anthropic: "I think there is a real underlying risk. Whenever there’s uncertainty, there’s a risk of overextension. We all face it. I face it. All the other companies face it. There’s an inherent risk when the timing of the economic value is uncertain. There’s an inherent risk of underreacting or overextension. And because companies are competing with each other and, frankly, we genuinely need to compete with, you know, our authoritarian adversaries, there’s kind of a lot of pressure to push things." (12/3/25)

Andy Jassy, CEO of Amazon: "Every customer experience will be reinvented by AI, and there will be a slew of new experiences only possible because of AI. I’ve followed the public debate on whether this technology is over-hyped, whether we’re in 'a bubble,' and if the margins and [return on invested capital] will be appealing. My strong conviction, at least for Amazon, is that the answers are no, no, and yes." (4/9/26)

Satya Nadella, CEO of Microsoft: "For this not to be a bubble, by definition it requires that the benefits of this are much more evenly spread. I think a telltale sign of if it’s a bubble would be if all we’re talking about are the tech firms. If all we talk about is what’s happening to the technology, then that’s just purely supply-side. Ultimately, if we’re not talking about, ‘Wow, here is a drug that was sort of brought into the market that’s super successful because it was AI accelerated in the clinical trial.’ And by the way, it’s happening." (1/20/26)

Mark Zuckerberg, CEO of Meta: "I think basically if you look at most other major infrastructure build-ups in history, whether it's railroads or fiber for the internet, in the dot-com bubble, these things were all chasing something that ended up being fundamentally very valuable. In most cases, it ended up being even more valuable than the people who were pushing the bubble thought it was going to be. But in at least all of these past cases, the infrastructure gets built out, people take on too much debt, and then you hit some blip, whether it's some macroeconomic thing or maybe you just have like a couple of years where the demand for the product doesn't quite materialize. And then a lot of the companies end up going out of business." (9/18/25)

Sam Altman, CEO of OpenAI: "I'm not worried about our compute buildout plans. I am worried about the world's compute buildout plans. I think we are going to be able to use all of the compute very profitably that we are planning to build. But I am seeing the first signs of what feels to me like unsustainable silliness of random, new neocloud popping up, people claiming that they're going to build gigantic amounts of compute next year that I think they don't have the revenue to support or a buyer. Yeah, I definitely feel like some fear of what the world is doing as a whole. Although I think we feel very good about what we've committed to." (9/1/26)

Jeff Bezos, founder and executive chairman of Amazon: "This is a kind of industrial bubble, as opposed to financial bubbles. And I'll tell you what I mean by that. If you go back, like the '90s had a biotech bubble and there were a bunch of pharma start-up companies that were designing drugs and using new techniques and the world got very excited. The investment world got very excited. As a group, they all lost money. But we did get a couple of life-saving drugs." (11/3/25)

Bill Gates, founder of Microsoft: "We need to define bubble. If what we mean is like Tulips in the Netherlands, that they eventually looked back and said, 'What the heck? There was nothing there. Those were just tulips.' No, that’s not where we are. If you mean it’s like the internet bubble where in the end something very profound happened, the world was very different. Some companies succeeded, but a lot of companies were kind of 'me, too,' fell behind, burning capital. Absolutely, there are a ton of these investments that will be dead ends." (11/28/25)

On massive AI spending

Sundar Pichai, CEO of Alphabet: "The one way I think about it is when you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us here. Even in scenarios where it turns out we are overinvesting, these are infrastructure projects that are widely useful for us, they have long useful lives, and we can apply it across and we can work through that." (7/23/24)

Andy Jassy: "We have customer commitments that make our capex investments predictable. We’re not investing approximately $200 billion in capex in 2026 on a hunch. We are willing to make large capex investments and endure short-term [free cash flow] headwinds for the substantial medium- to long-term FCF surplus. AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger." (4/9/26)

Mark Zuckerberg: "If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate, obviously. But what I'd say is I actually think the risk is higher on the other side. If you build too slowly, and then superintelligence is possible in three years, but you built it out assuming it would be there in five years, then you’re just out of position on what I think is going to be the most important technology that enables the most new products and innovation and value creation in history." (9/18/25)

Dario Amodei: "I think there’s a real dilemma deriving from uncertainty in how quickly the economic value is going to grow and the lag times on building the data centers that drives this. So I think there’s genuine uncertainty. There’s a genuine dilemma, which we as a company try to manage as responsibly as we can. And then I think there are some players who, you know, who are YOLO-ing, who pull the risk dial too far and I’m very concerned." (12/3/25)

Sam Altman: "In terms of being able to confidently pay for the compute we are committed to, I feel good about that. I think people right now are kind of in a, 'cost is no object, we’re just going to build out crazy amounts of compute, somebody will pay me a higher price.' And if we are able to succeed with our efforts to hugely drive down the cost of compute and the efficiency of compute up a lot, then, you know, you can imagine a world where there are some people that made dumb financial decisions. That happens in kind of like every boom, or most of them." (9/1/26)

On potential fallout

Satya Nadella: "This is a new general-purpose technology that is going to drive productivity and that productivity has to translate into very broad-based economic growth that is economy-wide, in terms of GDP growth. And if we don’t see that, then we are going to have a problem. Unless we see that broad economic growth, then we’re not going to have this movie end well. We are in the early innings of it, but there are real proof points of that." (7/26/26)

Mark Zuckerberg: "There are compelling arguments for why AI could be an outlier [versus previous bubbles]. And basically just if the models keep on growing in capability year over year and demand keeps growing, then maybe there is no collapse or something. But I do think that there’s definitely a possibility, at least empirically, based on past large infrastructure buildouts and how they led to bubbles, that something like that would happen here." (9/18/25)

Dario Amodei: "Building the data centers has a long lag time. It’s like a year or two. So I have to decide now, literally now or, in some cases a few months ago, how much compute I need to buy in, you know, early 2024 to serve the models in early 2027 when I get to that revenue amount. And there are two coupled dangers. One is that if I don’t buy enough compute, I won’t be able to serve all the customers I want. I’ll have to turn them away and send them to my competitors. If I buy too much compute, of course, I might not get enough revenue to pay for that compute. And, you know, in the extreme case, there’s kind of the risk of going bankrupt." (12/3/25)

Jeff Bezos: "When people get very excited, as they are today about artificial intelligence, for example, every experiment gets funded. Every company gets funded. The good ideas and the bad ideas. And investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas. And so that's also probably happening today. But it doesn't mean that anything that's happening isn't real. Like AI is real and it is going to change every industry. In fact, it's a very unusual technology in that regard, in that it's a horizontal enabling layer." (11/3/25)

Bill Gates: "You have a frenzy and you know some of these companies will be glad they spent all this money. Some of them, you know, will commit to data centers whose electricity is too expensive, that it could be done overseas. Or they'll buy a generation of chips and they won't have captured all their value before the next one comes along. But if you want to be a tech company, you don't get to say no, let's check out of this race." (11/28/25)

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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The main equity indexes slumped again on Friday, as semiconductor stocks sold off for a ninth straight trading session. Federal Reserve Chair Kevin Warsh shed only a little light on the central bank's upcoming decision on interest rates at an event in Asia. But he did heap a lot of praise on the potential upside for the broader economy from the artificial intelligence (AI) boom.

Still, CoreWeave (CRWV, -11.9%) remains a focal point, as investors, traders and speculators fixate on capex spending and whether what we're seeing instead is an AI bubble.

The VanEck Semiconductor ETF (SMH, -3.4%) extended its two-week losing streak, as Nvidia (NVDA, -1.4%) rallied into the green around noon but slumped after midday. Tech stocks, as well as AI stocks, generally dragged on the main equity indexes.

By the closing bell, the blue-chip Dow Jones Industrial Average, reversing early gains supported by rotation into energy and risk-off sectors such as consumer staples stocks, was down 0.3% to 52,002. Papa Dow held on for a 0.7% gain this week.

The broader S&P 500 slid 1.1% to 7,659, extending its weekly loss to 1.9%. And the Nasdaq Composite shed 2.1% to 26,140, as the tech-heavy index fell 4.5% from where it was last Friday.

The 2-year Treasury yield was down 3.0 basis points to 4.721%, as the short-term proxy for monetary policy traded in a wide range. Yields on the 10-year (+0.2 bps, 5.089%) and the 30-year (+0.7 bps, 5.435%) also moved up and down a lot on Friday.

'One Night in Bangkok' featuring Fed head Kevin Warsh

Warsh said little about the target range for the federal funds rate during an overnight "fireside chat" at the International Monetary Fund and World Bank Group annual meeting in Bangkok, Thailand.

While he was talking, though, equity index futures bounced to session highs, bond yields backed off a little more and the probability the Federal Open Market Committee (FOMC) will keep its policy rate unchanged at its late October meeting ticked up to 85.1% from 72.3% on Thursday.

That's according to CME FedWatch, which tracks price action in the 30-day fed funds futures market.

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"We removed a dose of accommodation about a month ago," Warsh said, referring to the 25-basis-point cut at the September Fed meeting. "I don't prejudge meetings. I don't believe in saying now what I might do at the meetings we have in the balance of the year."

Warsh also called AI "probably the most consequential change to the U.S. and the global economy in my lifetime. If you're a central banker and you're in the business of trying to ensure stable prices and full employment, you've got to recognize this as a shock."

Indeed, according to the Fed chair, AI will "fundamentally change the conduct of monetary policy."

With the official "blackout period" around its next policy decision starting tomorrow, that's the last we'll hear from the Fed until the conclusion of the next FOMC meeting on Wednesday, October 28.

Netflix needs a hit

Netflix (NFLX, -2.9%) announced its biggest layoffs since 2022 earlier this week, but naming a new chief content officer is probably a more important potential long-term catalyst for the communication services stock.

With NFLX down more than 15% year to date through Thursday, management is scheduled to report third-quarter results after the closing bell on Tuesday.

The stock has stagnated because of stale content that's left it struggling for engagement in an extremely competitive environment.

Co-CEOs Greg Peters and Ted Sarandos said in an internal memo that Netflix will be "disciplined about where we prioritize our people and resources" and focus on "high impact areas to improve our service."

For investors, that probably means a credible plan from the new management team to recapture eyeballs.

Flying car stock falls 2%

It's not the percentage part. It's the fact that the Magnificent 7 stock was down at all on the day Tesla (TSLA, -2.1%) introduced its Roadster, arguably the world's first flying car.

Say what you will about CEO Elon Musk and the grandiosity of his SpaceX (SPCX, -1.7%) project. This is the world's first flying car, people. "The Jetsons!" Right?

Well, actually, it's one thing to build a mind-blowing flying car, but another to introduce it when investors and traders, even speculators and policymakers, are focused on exploding capex and hyperscaler impact on the bond market.

Indeed, as Fed Chair Warsh acknowledged today, AI will boost central banks' ability to analyze data. It will also change the real economy, improve productivity and wealth.

At the same time, he cautioned, it's going to be a bumpy ride.

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Price action in the fixed-income market suggested bonds are in the process of finding a bottom, even as incoming data indicated inflation remains a problem. At the same time, during yet another difficult day for technology, the three main stock indexes rallied for modest gains on Wednesday.

By the closing bell, the blue-chip Dow Jones Industrial Average had added 1.1% to 52,177, the broad-based S&P 500 was up 0.3% at 7,744, and the tech-heavy Nasdaq Composite had rallied for a 0.08% gain to 26,713.

"As horrific as the PPI was," Louis Navellier of Navellier & Associates says, "believe it or not, Treasury yields actually declined on the perception that this may be the peak in the poor inflation news."

Indeed, the 2-year Treasury yield was down 4.5 basis points to 4.757%, while the 10-year (-9.9 bps, 5.091%) and the 30-year (-9.3 bps, 5.431%) pulled back even further.

As Navellier notes, Taiwan Semiconductor Manufacturing (TSM, -1,7%) reported 51% top-line growth and 59% bottom-line growth for its third quarter. Management also raised its full-year guidance.

Still, Nvidia (NVDA, -1.8%) was down again, as was the VanEck Semiconductor ETF (SMH, -1.0%) — the exchange-traded fund's eighth straight loss.

"A lot of market pundits think that stocks are priced for perfection," Navellier writes, "but I remain confident that when the third-quarter announcement season winds down, the S&P 500's earnings will be up at least 33%."

The Fed has 'work to do'

The Bureau of Labor Statistics (BLS) said before the opening bell that the Producer Price Index (PPI) rose by 1.3% in September, more than double a FactSet-compiled consensus forecast for 0.5% month-over-month acceleration. PPI was up to 6.3% from 5.6% compared to September 2025.

"PPI inflation was higher than expected in September as energy prices surged and food prices rose," Fifth Third Commercial Bank Chief U.S. Economist Bill Adams observes. "Core inflation exceeded forecasts, too."

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A red-hot September CPI report and today's PPI data "show no sign of inflation moving back to the Fed's target," Adams concludes, "leaving the central bank with 'more work to do,' to borrow Chair Warsh's phrase from his Jackson Hole speech in August."

Nike tops the Dow

Nike (NKE, +5.3%) is now the smallest of the Dow Jones stocks, and it's the worst performer of the 30 so far this year. But that didn't stop the sneaker company from leading the index on Thursday.

NKE was down 78.2% from an all-time closing high of $161.91 on November 5, 2021, to $35.30 at the end of regular trading on Wednesday, presenting what looks like a bargain to many investors, traders and speculators.

Indeed, the iconic athleisure brand has bounced off an intraday low of $31.97, plumbed on October 2 in the aftermath of a less-than-stellar fiscal 2027 first-quarter earnings report.

Perhaps what was once the consummate consumer discretionary stock will find its way to lists of the best value stocks to buy, perhaps not.

Wall Street remains skeptical about Nike's turnaround, with 10 analysts rating the stock a Buy, 25 calling it a Hold and seven saying it's a Sell. The average 12-month target price is $37.88, upside of 1.9% from NKE's closing price on Thursday.

Why we need to talk about CoreWeave

CoreWeave (CRWV, +5.9%), which completed one of the biggest IPOs of 2025 on the back of its AI cloud platform, has become the focal point for broad market concern about the health of the current industrial revolution.

CRWV has fallen about 64% from its June 20, 2025, all-time high, as questions about returns on the capex fueling the boom have mounted amid rising debt, spiking bond yields and growing perception of the risks of an AI bubble.

But Deutsche Bank analyst Brad Zelnick reiterated his Buy rating and his $150 12-month target price for the tech stock on Thursday and said recent price action presents an opportunity.

"A confluence of factors appear to have led to a sharp selloff in CoreWeave's public equity and debt over the past week," Zelnick writes. "There's no doubt CoreWeave's future is tied to the success of AI and demand for the underlying compute infrastructure supporting it, and thus its shares should reflect changes in sentiment here."

CRWV gapped down at Thursday's open, but rallied through the session to post a solid gain. "A strong customer base, established record of execution, backlog conversion and leading infrastructure performance is all supportive of their issuer profile relative to neocloud peers," Zelnick concludes.

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On October 19, a new rule by the Department of Transportation (DOT) narrowed the definition of what kind of flight disruptions are categorized as "air carrier delay." What sounds like a minor technicality will have a major impact on what you're entitled to as a passenger when a trip goes awry.

Your ability to get a refund for a delayed or canceled flight hinges on whether the flight disruption is considered to be within the airline's control.

At a time when airfare prices are soaring and your travel budget is already stretched, it's worth understanding how this seemingly technical change in definitions will impact your next trip. Here's how your rights have changed and what you can do to protect your investment under the new regulations.

What's changing about your right to a refund?

Technically, the new DOT rule simply altered how certain events are categorized. Airlines are required to report their on-time performance to the Bureau of Transportation Statistics (BTS) every month. That report includes a breakdown of delays, cancellations and interruptions into a set of predefined categories.

One of those categories is called "air carrier delay" and includes all delays that the BTS considers to be within the carrier's control. The new rule removed the following 10 events from the list of delays that fall under the "air carrier delay" category:

1. Medical emergencies that weren't caused by the carrier
2. Removing an unruly passenger
3. Airport closures caused by volcanic ash, wind or wind shear
4. Unscheduled maintenance that must be addressed before flight
5. Overheated brakes when caused by the use of those brakes in an emergency
6. A government shutdown or system failure
7. Cybersecurity attacks
8. Aircraft damage
9. Aircraft cleaning due to the death of a passenger
10. Baggage or cargo loading delay when it's caused by a system outage or other factors not controlled by the carrier or its contractor

For passengers, however, it's more than just a change in definition. According to the DOT, passengers are entitled to a refund of the ticket price "if the airline significantly delays a flight or significantly changes a flight and the consumer chooses not to travel or accept travel credits, vouchers or other forms of compensation offered by the airline."

In other words, with these 10 situations removed from the definition of what constitutes a delay caused by the airline, you now have 10 fewer situations in which you're entitled to a refund or other form of compensation, including hotels and food vouchers.

The intention behind the rule change. In the full text of the new rule published in the Federal Register, the DOT wrote, "it is expected that the total value of amenities and compensation currently provided by air carriers to consumers will be reduced under this final rule."

The goal with this category change is to create fewer scenarios in which you are entitled to a refund. That puts the onus on you to find other ways to protect your investment when you fly.

How passengers can protect their money

The new rule makes it harder to get a refund from airlines, but you still have some rights and other means to fill gaps created by the changing regulations.

• Check the DOT Airline Cancellation and Delay Dashboard to find out what compensation and guarantees your airline voluntarily provides. The page provides a clear breakdown of what major airlines have agreed to provide to consumers in various scenarios. As of this writing, it was last updated in September 2025, so you should double-check with your airline to see if the information is still current. But it's a good place to start, especially when booking, as you can see which airlines might provide the most protections if a flight goes wrong.
• Buy refundable tickets. If the delay is so long that you choose not to take the flight at all, it'll be less of a headache to get a refund on a ticket that's already refundable. These typically cost a little extra, but you won't have to worry about whether the delay you experienced qualifies for a refund or not under the new rules.
• Check your credit card for trip-delay coverage. This is not the same as trip-cancellation protection, which only kicks in if your flight is canceled. Trip-delay coverage will reimburse you for any prepaid expenses lost (such as the missed connecting flight or the lost night at the hotel from arriving a day late) as a result of a delayed flight. It might also cover additional costs caused by the delay, such as last-minute accommodations and meals while waiting for your flight.
• Ask for a refund anyway. The "air carrier delay" category still exists, which means there are still situations in which the delay is considered to be within the airline's control. In those situations, you're still entitled to a refund. Even if you're not sure of the reported cause of the delay in the moment, it doesn't hurt to call customer service and ask for a refund just in case. Typically, if you have travel insurance through your credit card or a separate policy, you need to try to get a refund from the airline as a first step before filing a claim anyway.

Between higher ticket prices and fewer ways to get that money back if something goes wrong, protecting your trip is more important than ever. If your card doesn't offer trip-delay coverage, buy travel insurance that does. This is a good way to fill in the gaps and make sure you can get your money back if your trip is interrupted or ruined for just about any reason.

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If your accountant only contacts you during tax season, you might be paying for a glorified report card, not strategy. But your professional might not be entirely to blame.

The tax preparation industry has been caught in a severe supply-and-demand squeeze. On the supply side, a talent drain is hollowing out the industry, with more than 300,000 accountants and auditors leaving the workforce in two years, according to Bureau of Labor Statistics data.

On the demand side, clients are increasingly frustrated and ready to move. A new report from financial directory Sam's List reveals that 36% of people seeking personal tax help want new professionals to replace their current provider. This urgency is driven by affluent households, with more than half of those seeking a financial adviser reporting a net worth of $1 million or more.

That widening gap can leave overextended accountants concentrating on compliance and pushing strategic client conversations further down the road — often until tax season is already underway.

The problem: Tax preparers vs tax planners

Tax preparation and tax planning are distinct financial services, yet industry data show consumers often purchase basic compliance when their financial situations might require proactive planning.

"You can't expect an advisory relationship when you've only hired someone to prepare a tax return," tax strategist and enrolled agent David A. Perez told Kiplinger.

"If [the last time you spoke] was 'at my appointment in March,' nobody was looking at your tax situation while you were still making the decisions that affected your tax bill," he adds.

Perez, CEO of advisory service company Tax Maverick AI, suggests the disconnect stems from an industry business model prioritizing client volume over year-round advisory work.

"Think about the economics. When your pricing requires you to take on hundreds of clients, where does the time for deeper planning come from? At $1,000 per client, you need 300 clients to generate $300,000 in revenue — that's before expenses."

To maintain those revenue thresholds, many tax professionals work 50-to-80-hour workweeks during the traditional spring tax season, balancing expanding client rosters against smaller internal teams.

This high-volume workload correlates to a measurable drop in customer satisfaction.

• According to Sam's List, one in three taxpayers utilizing professionals are seeking a replacement.
• Among those taxpayers, 16% are unhappy with their current provider, and another 10% are seeking a more affordable option.

In addition to the CPA shortage, the friction is compounded as a new wave of buyers enters the market who might not have a clear baseline for service standards.

"For a lot of people, this is the first time they've hired anyone to help with their taxes," Kimberly Green, co-founder of Sam's List, noted in an email obtained by Kiplinger. "That's a big group starting from zero."

Who did you hire?

Most Americans first hire a tax professional at age 29, often hoping the expert will maximize their annual refund, as Kiplinger has reported. However, whether those expectations align with reality depends entirely on the specific service model you purchased.

While a tax preparer focuses on backward-looking compliance — logging what already happened — a tax planner focuses on forward-looking strategy executed before major financial decisions are made.

To distinguish between the two service models, Perez outlined three operational benchmarks that differentiate a planner from a traditional preparer:

1. Communication timing. If your tax pro last spoke to you in tax season, you are likely working with a preparer. Strategic planning requires ongoing conversations before major events occur — such as taking a raise, selling stock, acquiring real estate or launching a business.
2. Quarterly estimate methodologies. Standard preparation services often calculate your quarterly estimated tax payments based on the prior year’s bill to satisfy IRS safe-harbor rules and avoid underpayment penalties. A tax planner forecasts your current-year income trajectory and adjusts those estimated payments in real time, as circumstances change.
3. Actionable strategic deliverables. A traditional preparer reports what you owe. In contrast, a planner provides actionable recommendations, such as restructuring business entities, optimizing retirement vehicle funding, or timing capital expenditures, alongside projected tax savings from those moves.

Understanding your current tax model makes it easier to decide whether to add year-round strategy to your financial plan or hire a new professional. Tax preparer fees, such as those for a CPA, can range from $200 to more than $2,500 for one income return. Adding tax planning on top of that can price out some taxpayers' budgets.

High earner risks (and rewards)

For households earning $250,000 to $500,000 or more — including preretirees and retirees — the gap between basic tax preparation and proactive tax strategy carries steep financial consequences.

Without planning, high-net-worth taxpayers might encounter costly year-end tax traps, including:

• The net investment income tax (NIIT). Crossing $200,000 in modified adjusted gross income (MAGI) as a single filer or $250,000 for married couples triggers an additional 3.8% surtax on investment income, including capital gains, dividends and rental income. Strategically timing asset sales before year-end can keep your MAGI below those thresholds.
• The alternative minimum tax (AMT). High earnings combined with specific financial moves — such as exercising incentive stock options (ISOs) or claiming a large state and local tax (SALT) deduction — can unexpectedly trigger the AMT, disallowing your standard deduction and recalculating your tax bill at a higher rate.
• Uncoordinated Roth conversions. There are several reasons to convert a traditional IRA to a Roth IRA, such as achieving tax-free growth for your portfolio. But performing a conversion without modeling your overall bracket increases your current-year taxable income. This can accidentally bump you into a higher marginal federal tax bracket or trigger Medicare premium surcharges.

This risk exposure explains why higher-income taxpayers allocate significantly larger budgets to financial advisory services. Sam's List reports that two in three clients (66%) look for an accountant with a budget of $5,000 or less, while nearly one in five seekers plan to invest $20,000 or more annually.

Industry analysts estimate these larger budgets drive the need for year-round oversight, as proactive tax planners continuously evaluate income sources across multiyear horizons.

Steps to take in October and November 2026

Finding and sticking with a tax planner who meets your needs can feel daunting, particularly during the ongoing shortage of tax professionals. However, if you want to move from reactive filing to proactive tax strategy before the end of the year, there's still time to act.

"Schedule a real planning meeting now," Perez advises. "Not a quick email. Ask, 'What is my projected tax bill? What opportunities actually apply to me? What would I need to invest, and when do I need to act?' "

Some actions, such as updating your tax withholding or reviewing your required minimum distributions (RMDs), need to happen by December 31.

Other opportunities remain open after the year-end deadline, such as making certain IRA contributions or the fourth quarter estimated tax payment for the 2026 tax year (usually due January 15 of the following year).

If you want a fresh start for 2027, establish the planning relationship at the beginning of the year — agreeing on the scope, the investment, and when you'll meet long before filing season arrives. That way, when tax season finally rolls around, your return simply formalizes the work you've already done.

"Your tax return should reflect a plan you already worked on," Perez emphasizes, "not be the first time you find out you needed one."

Read More

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You probably know that money is taken out of your paycheck to help fund the Social Security program. But did you know there's a limit on how much of your income is subject to the tax?

That threshold is rising in 2027, which means higher-paid workers could see more money withheld from their paychecks next year.

The Social Security Administration (SSA) just announced a new wage base for 2027 (roughly 4.2% higher than the 2026 tax limit), along with the annual cost-of-living adjustment (COLA) for more than 70 million Social Security recipients.

The new 3.6% COLA will boost monthly checks for beneficiaries, while the wage base determines how much of a worker's income is subject to Social Security payroll taxes.

Also worth noting: These updated numbers come as some lawmakers weigh proposals to shore up Social Security — including whether to eliminate the Social Security tax cap. Here's more to know.

New 2027 Social Security payroll tax limit

Every year, the SSA sets a limit on how much of your earnings can be taxed for Social Security. Any money you earn above this limit — also called the tax cap or wage base — isn't taxed and doesn't count toward your future retirement benefits. This limit usually goes up each year based on average wage changes across the country.

For 2027, the tax limit is $192,300, up about 4.23% from $184,500 for 2026.

High earners. If you're at or above the taxable limit, you will pay the 6.2% tax on more of your income.

• The maximum tax an employee will pay in 2027 is $11,922.60, up from $11,439 for 2026.
• The taxable wage base is increasing by $7,800.
• An employee earning at least $192,300 will pay an additional $483.60 in Social Security taxes in 2027 (for example, 6.2% of $7,800).

Other workers. If your income is below the taxable limit, all of it is already subject to Social Security tax.

Note: The wage base also matters for future benefits. Social Security uses a worker's earnings history to calculate retirement benefits, generally based on the highest 35 years of indexed earnings. Earnings above the annual cap don't count toward that calculation.

How much Social Security is taken from a paycheck

Employees pay 6.2% of covered wages toward Social Security, and employers pay another 6.2%. The combined rate is 12.4%. Self-employed workers generally pay both portions, for a combined rate of 12.4% on net earnings up to the annual wage base.

Self-employed individuals can generally deduct the employer-equivalent portion of their self-employment tax when calculating adjusted gross income (AGI).

It's also important to distinguish Social Security taxes from Medicare taxes.

• Medicare payroll taxes don't have the same wage cap.
• Employees generally pay 1.45% in Medicare taxes on all covered wages, and employers pay another 1.45%.
• Higher-income workers might also owe an additional 0.9% Medicare tax on wages above $200,000 for single filers and $250,000 for married couples filing jointly.
• Those thresholds are separate from the Social Security wage base.

Will the Social Security tax cap be eliminated soon?

As Kiplinger has reported, Sens. Elizabeth Warren, D-Mass., and Bernie Moreno, R-Ohio, are calling for the elimination of the Social Security payroll tax cap. The proposal would require people with higher wages to pay Social Security taxes on more of what they earn.

If the tax cap were eliminated and assuming the 2026 limit, a worker earning $1 million, for example, would have another $815,500 of wages subject to the Social Security tax.

At the current 6.2% payroll tax rate, that would be about $50,561 more in Social Security taxes for the employee. The employer would generally owe another $50,561.

Warren and Moreno say the additional revenue could help protect Social Security benefits without raising the payroll tax rate for most workers (i.e., those whose wages remain below the taxable maximum).

But changing the Social Security tax cap would be more complicated than simply asking high earners to pay more taxes. Key questions Congress would have to address include how to change the cap and whether additional taxes would increase Social Security benefits for high earners.

• Social Security benefits are based, in part, on a worker's earnings history, and under current law, earnings above the existing cap don't count toward benefit calculations.
• Ultimately, the financial effect of eliminating the cap would depend partly on whether and how those additional earnings would be credited toward benefits.

For now, there's no major legislative change involving the tax limit, except for the just-announced annual adjustment.

Still, the debate surrounding Social Security taxes comes as the Social Security program faces a long-term funding shortfall. According to the 2026 Social Security Trustees Report, the retirement and survivors trust fund is projected to be depleted in late 2032 if Congress doesn't act.

At that point, continuing revenue would pay 78% of scheduled benefits. That could mean a 22% cut in benefits across the board. Stay tuned.

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Treasury yields surged and equity indexes sank after the government said consumer prices rose last month at a faster clip than Wall Street forecast. Technology and other sectors closely connected to the artificial intelligence (AI) revolution reflected today's sharp risk-off turn, as healthcare, consumer staples and energy stocks caught bids.

The 2-year Treasury yield (+1.5 bps, 4.808%) spiked more than 10 basis points within minutes of the release of a red-hot September CPI report, but eased back through Wednesday's trading session. "On balance," Barclays economist Pooja Sriram writes, "this morning's inflation data are unlikely to provide much comfort to policymakers."

Sriram says risks economists "have flagged for some time, including energy pass​-​through into core prices, resilient consumer spending, and AI​-​related price pressures" are becoming bigger factors in the price stability equation.

As the economist concludes, "Although favorable base effects should mechanically lower annual inflation rates next year, the recent run of prints casts doubt on how much progress is being made on underlying inflation."

The 10-year Treasury yield (-2.7 bps, 5.19%) and the 30-year Treasury yield (-4.6 bps, 5.517%) were lower at the end of a volatile session in the bond market. CME FedWatch now shows a 34.9% probability of a 25-bps rate hike at the conclusion of the October 27-28 Federal Reserve meeting, up from 22.1% on Tuesday.

Investors, traders and speculators will turn their attention to the release of September's Producer Price Index (PPI) and retail sales data before Thursday's opening bell for the next clues on interest rates and monetary policy.

ASML sends a risk-off signal

By the closing bell, the Nasdaq Composite had taken a 1.9% tumble to 26,692, the tech-heavy index anchored by a seventh straight losing session for chipmakers on a mixed earnings calendar showing from one of the industry's overseas stalwarts.

The broad-based S&P 500 was down 1.1% to 7,719, and the blue-chip Dow Jones Industrial Average had slipped 0.09% to 51,622, as other groups boosted by the AI buildout reflected the macro mood.

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Netherlands-based ASML (ASML, -3.9%) reported a 47% increase in third-quarter revenue and 127% earnings growth, just missing on the top but easily beating on the bottom line. Management raised fourth-quarter sales guidance, too.

ASML also said it would struggle to meet demand for its chips in 2027 and 2028, indicating a healthy order backlog that should signal good things for semiconductor stocks.

Alas, Nvidia (NVDA, -3.2%) was among the worst Dow Jones stocks on Wednesday, joined by Caterpillar (CAT, -3.1%). The industrial stock is among those names, beyond tech and communication services stocks, benefiting from AI-driven demand.

Amid broader curiosity about the trajectory of the federal funds rate, markets seem wary of any and all kinds of open questions, even (perhaps especially) as they relate to growth expectations.

“Uncertainties around ASML's ability to ship DUV [deep ultraviolet lithography] tools to China remains a hot topic with investors," BofA Securities analyst Didier Scemama wrote ahead of ASML's report. "However, we think this is likely largely baked in the stock."

Scemama reiterated his Buy rating and his $2,915 12-month price target on ASML's American Depositary Receipt (ADR), which closed at $1,650 on Wednesday.

Bank of America pays up

Bank of America (BAC, -4.7%), because of a potential positive impact on net interest margin, is among the best stocks to buy for rising interest rates this fall.

The big bank also looks like a big bargain after BAC suffered its worst post-earnings share-price decline since the early aftermath of the global financial crisis more than a decade and a half ago.

As Jefferies analyst David Chiaverini notes, the Treasury Department announced a $1.2 billion fine on Bank of America for violations of anti-money laundering rules previously identified in a December 2024 consent order.

The fine resulted in a 17-cent-per-share hit to BAC's bottom line. But Chiaverini, who has a Buy rating on BAC and considers the financial stock a "Franchise Pick," now sees upside from here of about 36% based on his 12-month target price of $70.

"While the charge is a meaningful one-time hit," the analyst observes, "we believe remediation costs are largely embedded in the current expense base. The key debate is how long the consent order could be in place and the extent to which it could impede operations, if at all."

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"Perhaps it takes courage to raise children," John Steinbeck wrote in 1952's East of Eden. The American classic has a lot to say about parenting — and a lot to say about how money can twist relationships within families, despite good intentions.

Without giving away spoilers, I'll just say that East of Eden is ultimately a story about what we do and do not inherit from our parents. Because of that, with a new adaptation of the Cain-and-Abel tale now available to stream on Netflix, we partnered with our sister site CinemaBlend to ask some cast members about handling inheritances.

CinemaBlend sat down with actors Hoon Lee, Joseph Zada and Joe Anders. The latter two play brothers Cal and Aron, the younger generation of the story. Where Aron (Anders) is kind and trusting, Cal (Zada) is scheming and suspicious. To put it another way, a Kiplinger-Morning Consult survey found that 33% of adult children expect an inheritance will create conflict with their siblings: Cal and Aron are the types of squabbling siblings trusts and professional executors were created for in estate planning.

CinemaBlend asked Anders and Zada what they think would've happened if their characters' parents passed their businesses down to the brothers to run.

"I think I would've killed that," Zada said, in characteristically Cal fashion.

Turning to his onscreen brother, he said, "I don't know about you, dude. You're a little all over the place. I think you really wouldn't have done very well. You would've thought that you would've done great."

"Aron would've been totally convinced he was doing amazingly," Anders agreed. "And then I think he would've had a wake-up call at some point."

The 'wake-up call' of inheritance

There's a lot of confidence when it comes to inheritance. Our survey found that 70% of adult children feel confident in their ability to manage an inheritance.

But expectations and confidence don't always align with reality. Eight percent of adult children said they believe their parents' estate includes business assets — but only 2% of parents said business assets were in their estate. On the flip side, 54% of parents said real estate, including their home, is part of their estate — but only 32% of the younger generation said the same. These differences demonstrate the lack of understanding adult children have about what they may inherit, and those surprises could lead to, as Anders put it, shocking "wake-up calls" about how prepared you actually are.

"Confidence and competence are different things," Valerie Galinskaya, managing director and head of the Merrill Center for Family Wealth®, told me in our Kiplinger Conversation about inheritance. That's why it's important for parents to have open and honest conversations about their estate with their children (although, well, Aron and Cal may not have wanted to hear all about it from their mother).

By having these conversations, and especially by having these conversations throughout life stages from a young age, parents can better ensure that their legacy won't be squandered by overconfident and underprepared children. They can help their children know what to be ready for and how to manage certain money challenges.

When we asked adult children in our survey what they'd want to use an expected inheritance for, one respondent said, "I hope to use it to get a nice family business going for our future generations."

It's a lofty idea to start a business you hope to be a family legacy, but as each generation steps up with their own hopes, dreams and, let's face it, faults, it's not a given that even a successful business will survive a second generation. It's often not enough to simply build an estate; you also have to educate your children to be capable of managing it.

Because while it may seem like a gift to leave an inheritance, East of Eden is a prime example of how it can all go terribly wrong.

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

Artificial intelligence will be transformational, akin to the dawn of the internet, but unfolding at a faster pace. But overspending on AI is creating a bubble, in our judgment, like other major industrial projects in history, such as railroads, electrification or the web.

Here’s how we currently see the state of play.

AI outpaces previous building booms

AI is the largest infrastructure project ever. U.S. spending is double the dot-com peak, when the telecom and fiber build-out hit 1.2% of GDP in 2000, according to an analysis by the investment firm Apollo. AI is now at 2% of GDP and will soon be 3%.

Big Tech spending will hit $1 trillion next year in capital expenditures from Alphabet, Amazon, Meta and Microsoft, according to data compiled by Bloomberg. That’s up from $700 billion this year and $380 billion in 2025. Back in 2022, it was $150 billion. With big spenders Oracle and SpaceX, it’s even higher. Though the spending is expected to level off, there’s no end in sight for $1 trillion-plus yearly outlays.

Unlike previous infrastructure build-outs with up-front spending on things that lasted decades, AI spending resets every four to six years as high-priced AI chips in data centers need to be upgraded, along with other equipment.

And improving AI is getting more expensive, requiring more computation and electricity to develop leading-edge AI. New AI models can cost $1 billion. A huge, 1-gigawatt data center? $60 billion, according to Nvidia CEO Jensen Huang.

Some of the most significant risks

Among risks that bear watching: The drastic business shift of tech giants from high-margin software to capital-intensive infrastructure. Once fountains of cash, most of the top AI spenders will have negative free cash flow this year and in 2027. S&P Global doesn’t project a recovery of FCF for most major players until 2029, a timeline that would lead to mounting pressure and possible investor blowback.

Debt-fueled financing with increasingly complex structures, such as special-purpose vehicles, or SPVs, which get debt off Big Tech’s books. Recently, Nvidia spearheaded a plan with investment firms, such as BlackRock and Goldman Sachs, to unleash $500 billion in AI financing. The plan seeks to turn AI chips in a data center into an investable asset and highlights how the AI boom is being financed by unconventional means. BlackRock CEO Larry Fink compared it to the creation of mortgage-backed securities in the 1970s. Those MBS securities went on to play a leading role in the 2008 financial crisis.

The massive spending commitments. For example, Alphabet has $811 billion in obligations, mostly for AI. OpenAI has plans to spend $800 billion through 2030 to build some of the world’s biggest data centers in New Mexico, Texas, Wisconsin and Michigan. Flexibility may be hard to come by with multiyear deals for chips, power and land. Big Tech spenders are forecasting demand for AI years in advance, an inherently dicey proposition.

Circular deals, such as Nvidia financing the purchase of its own chips. For example, Nvidia is providing up to $105 billion in financing for an OpenAI data center in Ohio. Even with a torrent of cash from soaring chip sales, Nvidia can’t maintain the pace of its recent extensive dealmaking, according to a report by Morningstar’s PitchBook. Another example: Microsoft has a 25% stake in OpenAI, which accounts for 70% of Microsoft’s AI sales.

The collective action problem of tech executives, all willing to overspend in the pursuit of “superintelligence,” an ill-defined AI breakthrough. “The risk of underinvesting is dramatically greater than the risk of overinvesting,” said Sundar Pichai, the CEO of Alphabet, back in 2024. Four or five tech companies breaking the bank to build the most advanced AI is not viable over the long run. It would not be surprising if, eventually, the race results in two to three leading-edge providers.

Other risks include AI turning into a low-cost commodity, stemming from both efficiency gains and cheaper AI services, including Chinese models, flooding the market. That could lessen demand for the most advanced, premium-priced AI. A terror attack or other rogue event involving AI could spur regulations that slow down or restrict the technology in an onerous way. Or AI improvements could slow or stall, lessening the pressure to spend so heavily on developing new AI systems.

The arguments against a bubble

Many analysts take issue with bubble talk, since revenue is exploding at Anthropic, OpenAI and other firms. Tech giants such as Alphabet and Amazon have diversified global businesses that cater to both businesses and consumers, with massive amounts of revenue. Plus, demand for AI is vastly outpacing supply, even as businesses cope with high costs.

AI use has exploded among businesses and consumers as free chatbots from Meta, Alphabet and OpenAI have proliferated. OpenAI has 900 million active weekly users, plus over 50 million consumer subscribers, with plans starting at $8 per month. Anthropic has hundreds of thousands of paying business customers and is on track to make tens of billions of dollars in sales per year.

But the revenue earned from AI is still far from keeping up with the necessary computing’s soaring cost. For AI spending to be sustainable, the tech must expand beyond employee productivity software or even entire IT budgets. AI must disrupt and reshape entire industries, from manufacturing and financial services to health care and retail. Businesses would need to shift huge amounts of spending that they now devote to labor and funnel it to AI products and services.

Amid AI’s fast adoption, tech executives have acknowledged the risk of a bubble. For example, Amazon founder Jeff Bezos has called what’s happening an “industrial bubble,” where investor excitement leads to certain money-losing bets but also breakthrough ideas. Meta CEO Mark Zuckerberg has said that a bubble is “definitely a possibility,” like those stemming from major infrastructure projects of the past.

"I am worried about the world's compute build-out plans," said OpenAI CEO Sam Altman in an interview in early September. Altman sees the first signs of "unsustainable silliness" of certain AI cloud companies, known as neoclouds, that claim they will build “gigantic amounts of compute” without securing the needed financing or customers.

The bottlenecks to AI progress

There are likely bottlenecks that slow AI adoption by businesses and consumers, ranging from human behavior to regulatory issues. That friction is sure to delay the full potential of AI, including all the enhanced productivity it promises. For Big Tech spenders, such delays will be hard to endure as they seek higher revenue and profits.

Another issue not to be overlooked is the major roadblocks to AI deployment, especially accessing the needed power, along with shortages of chips, equipment and labor. Some analysts point to roadblocks as a built-in factor staving off a bubble, preventing too much development, too fast. But those roadblocks will be more evident over the long term rather than in the short run. The explosion of data center opposition is a real concern, but tech giants have ample data centers in the pipeline for now.

Bubbles fund breakthrough ideas

It’s not clear when a bubble would burst or deflate. A fallout could include AI start-ups going out of business and certain infrastructure providers facing lumbering debt loads. The Kiplinger Letter’s view is that a pullback in spending could spark a mild recession, as the tech bust did in 2001.

Still, overspending on AI will be useful, pouring money into valuable areas that lay the foundation for an economic leap. Promising areas include AI software that automates complex white-collar office tasks, AI models that accelerate drug discovery and AI coding tools that automate computer programming. The ultimate winners of the race may not be the heavy spenders of today, but future start-ups that launch new products and services enabled by AI.

But on the cusp of all this potential, there’s no doubt that uncertainty and financial risk are rising.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Stocks closed lower Tuesday as market participants took in a lackluster start to earnings season and looked ahead to Wednesday's key inflation update. A steep sell-off in several semiconductor stocks didn't help, with reports that China's CXMT is making progress on its memory chip designs putting pressure on this corner of the market.

At the close, the blue-chip Dow Jones Industrial Average was down 0.4% at 51,670 and the broader S&P 500 was 0.02% lower at 7,805. The tech-heavy Nasdaq Composite, meanwhile, shed 0.2% to 27,204 as mega-cap memory stocks, including SK Hynix (SKHY, -3.2%) and Micron Technology (MU, -3.6%), slumped.

Johnson & Johnson (JNJ) was the worst Dow Jones stock today, falling 5.7% after the drugmaker reported earnings. JNJ beat top- and bottom-line estimates for its third quarter, but sales in its medical devices division fell short of Wall Street's expectations due to the ongoing conflict in the Middle East.

There are "countries that still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia," J&J Chief Financial Officer Joe Wolk told CNBC. "They pride themselves on having solid healthcare, very good healthcare. But their budgets now are being resourced and allocated towards defense."

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JPMorgan reports a double miss

Elsewhere on the earnings calendar, JPMorgan Chase (JPM, -0.9%) reported second-quarter earnings of $5.75 per share, up 13.4% year over year but below analysts' estimates. JPM's revenue of $50.2 billion also fell short of expectations.

"JPMorgan had a rare miss against expectations," says David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. "Dimon called it another quarter of strong results, but gave few clues on the shortfall, which was partly securities losses, and he said the bank cut back on share repurchases in the quarter. The franchise still looks healthy, but the quality of the quarter was a step below what investors have come to expect."

Among the other big banks reporting, Wells Fargo (WFC, -3.1%) fell short on revenue, while Goldman Sachs (GS, -0.2%) and Citigroup (C, -5.6%) beat on both the top and bottom lines.

Bumble goes private in $1.3 billion deal

Bumble (BMBL) surged 56.6% today and is up 134% this week on news the dating app will be taken private by Ithaca Holdings in an all-cash deal valued at $1.3 billion.

The female-founded platform, which prioritized user safety, went public in 2021 and closed its first day with a market cap of $7.7 billion. It has been a downhill slide since then, with BMBL stock's current market value closer to $783 million.

"Bumble was founded on a simple belief: meaningful relationships are essential to a healthy, happy life. Today, that belief feels more important than ever," said Whitney Wolfe Herd, Bumble's founder and CEO, in the press release. "In Ithaca, we have found a partner who shares our vision, believes in our women-first mission, and is committed to investing in Bumble's future."

Inflation data is on deck

Earnings will remain in focus on Wednesday, with Bank of America (BAC, -1.1%) and Morgan Stanley (MS, -1.8%) among those reporting. But most of Wall Street's attention will be on the release of the September Consumer Price Index (CPI) report.

"The September CPI could determine whether the Fed's next hike is imminent, or simply still ahead," explain UBS Global Research economists. "An upside surprise, particularly in the core, could revive the October debate, both moving market pricing and influencing the decision itself," while a print closer to forecasts "would leave the Committee with room to wait."

According to CME Group FedWatch, futures traders are currently pricing in a 78% probability that the Federal Reserve keeps interest rates unchanged when it meets later this month. Odds for a December rate hike are at 70%.

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In mid-September, the Federal Reserve raised interest rates for the first time in three years. In its policy statement, the central bank stated that "inflation remains elevated," and the rate hike "will support a timelier return to the Committee's 2 percent goal."

The decision followed the August Consumer Price Index (CPI) report, which showed headline inflation was "uncomfortably high," explains David Payne, staff economist and reporter for The Kiplinger Letter. The pickup, he says, was driven by higher gas and fuel oil prices, shelter costs and airfares.

And with energy costs likely to stay elevated as the situation in the Middle East remains unresolved, Payne believes the annual CPI rate will end the year at 4%, while core CPI will be at 2.7%.

With another Fed meeting on the near-term horizon — the central bank will announce its next policy decision on Wednesday, October 28 — the release of the September CPI report is a key economic event we're tracking.

According to the Bureau of Labor Statistics (BLS), the CPI rose 0.6% from August to September and 3.7% year over year.

This is faster than the 0.4% monthly and 3.4% annual increases seen in August, with the year-over-year rate coming in above economists' estimate of a 3.6% rise.

"The index for gasoline rose 9.1 percent in September, accounting for over half of the monthly all items increase," according to the BLS. "The energy index increased 5.2 percent over the month following a 2.1-percent increase in August."

Shelter costs were higher, too, while food prices were unchanged.

What is the CPI?

"CPI is a measure of the average price of that basket of goods and services over time," writes Kiplinger contributor Coryanne Hicks. "The specific goods and services within the CPI basket are based on information that around 24,000 families and individuals give the U.S. Bureau of Labor Statistics on what they buy."

The two primary measures of CPI are headline, which is the total inflation rate experienced by households, and core CPI, which excludes volatile food and energy prices.

Core CPI rose 0.3% month over month in September, the same as in August. Year over year, core inflation was up 2.6%, faster than the 2.4% rise from the month prior.

Economists expected core CPI to rise 0.2% month over month and 2.5% year over year.

Prices for recreation, used cars and trucks, education, airline fares, medical care and apparel were higher, while communications costs were slightly lower.

With the September CPI report on the books, we looked at what economists, strategists and other Wall Street experts are saying about the data and what it means for the Fed and the economy. These outlooks, edited at times for brevity, are below.

What Wall Street thinks about the September CPI report

"Chairman Warsh advised market participants to focus on the trend and not the incremental data. September CPI leaves intact the upward trend in core prices over the last 6 months. At the margin, it bolsters the case for a hike at the October FOMC. However, we think the bigger picture is the balance of risks. The economy is growing strongly so the FOMC can place more emphasis on the inflation mandate." - Brad Conger, Chief Investment Officer at Hirtle & Co.

"Today's warmer core CPI release bolsters the case for additional rate hikes, but recent dovish Fed-speak from New York President Williams and Governor Jefferson suggests that the bar is high for an immediate hike. In our view, September's print was likely not sufficient for the Fed to execute back-to-back increases at the October FOMC meeting. The steady rise in long yields has increased corporate/consumer borrowing costs and tightened financial conditions alongside the Fed's move, meaning the bond market has been doing some of the heavy lifting for the Fed." - Jeff Schulze, Head Investment Strategist at Franklin Templeton Institute

"Wednesday's CPI was stronger than expected, and it's clear as ever that inflation is stubborn and moving in the wrong direction. The inflation uptick is likely to lead the Federal Reserve to start a rate-hiking cycle. While we expect the Fed to pause on any rate changes in October, we expect rate hikes to resume in December and continue until June 2026. The Fed will not tolerate inflation at these levels and will apply the same playbook as it did in 2022 to keep it in check with a series of interest rate increases." - Skyler Weinand, Chief Investment Officer at Regan Capital

"Today's CPI report came in hotter than expected with September headline rising 0.649% MoM and core CPI increasing 0.335% MoM, versus expectations of 0.58% and 0.21%, respectively. With underlying inflation failing to cool, the September rate hike now looks like a start rather than a final move, and expectations for further rate hikes have increased. The Fed will remain data-dependent, but the focus now turns to October 28, where a second consecutive hike is firmly on the table." - Dustin Thackeray, CFA, Head of Portfolio Management at Crewe Advisors

"In our view, today's print puts the Fed's tactical breather priced into the market for October in question. With $100-plus crude adding friction to already sticky core prices, the latest data increasingly complicates the disinflation narrative and may limit the Fed's flexibility." - Tim Urbanowicz, Chief Investment Strategist, Innovator ETFs from Goldman Sachs Asset Management

"CPI came in hot and it wasn't just fuel prices, as core inflation ran at a 3.7% annualized pace in September and 3.2% over three years. The only surprise is that investors keep getting surprised by broad-based inflation. And we've yet to see the full impact of higher diesel prices and the AI boom. Another Fed hike to 4.3% looks likely this year, but that's hardly restrictive enough to bring inflation down to 2%." - Sonu Varghese, Chief Market Strategist at Carson Group

"Inflation is cooking with gas. It is abundantly clear where the inflation impulse originates, but two wars need to end before we get any relief. The Federal Reserve made the mistake of calling COVID-era inflation transitory, and now it appears they are set to make the same mistake in reverse on the energy supply shock." - Jamie Cox, Managing Partner for Harris Financial Group

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