This week confirmed that the U.S. economy remains active,although costs are still elevated. Services continue to expand and unemploymentclaims remain low, while oil prices and the Federal Reserve’s meeting minutesshow that inflation remains a concern. In Canada, weaker employment contrastswith an improvement in trade. Corporate earnings and several sectorannouncements also produced significant differences in stock performance.Costco, under the spotlight this week, illustrates consumers’ continued searchfor value.
Under the Spotlight
Costco (COST)
Costco’s monthly results, released Wednesday, offered anencouraging signal about its members’ spending. For the five weeks endedOctober 4, net sales reached US$30.02 billion, up 13.0% from a year earlier.Comparable sales, which measure performance at locations already in operation,increased 11.4%.
The headline figure requires some context. Excludinggasoline prices and foreign exchange effects, comparable sales growth was 7.6%,including 8.0% in the United States and 4.9% in Canada. The timing of LabourDay also added slightly more than half a percentage point to September sales.Demand remains strong, although the full acceleration does not reflect anequivalent increase in underlying purchases.
Digitally enabled sales rose 19.0%. This measure alsoincludes orders fulfilled in a warehouse or through Costco Travel, extendingbeyond online purchases delivered to customers.
These figures build on a strong fiscal year. Costco reportedannual net sales of US$297.2 billion and diluted earnings per share ofUS$20.76, compared with US$18.21 a year earlier. Membership fees generatedUS$5.91 billion. They help support a business model built on competitiveprices, a limited product selection and high sales volumes.
Valuation nevertheless deserves close attention. At Fridaymorning’s quoted price, the shares traded at approximately 45.6 times fiscal2026 earnings per share. This calculation uses reported earnings, which includecertain non-recurring items, rather than earnings forecasts.
In our view, this valuation leaves less room for a slowdown.Labour costs, competition and consumer spending conditions are additionalrisks. Costco continues to deliver strong operating growth. The question forthe stock is whether that growth can meet the expectations already reflected inits price.
This Week’s Theme
Growth faces persistent cost pressures
On Monday, the U.S. ISM Services Index stood at 54.9,compared with 55.4 in August. A reading above 50 indicates expansion. Neworders remained strong at 59.8, and the employment index moved back above 50.Economic activity therefore retains some support.
Costs remain the main source of pressure. The prices paidindex reached 74.0, its highest level since July 2022. This does not meaninflation is running at 74%; it indicates that price increases are widespread.Meanwhile, initial unemployment claims released Thursday, at 197,000, pointedto limited layoffs.
The Federal Reserve’s meeting minutes, released Wednesday,showed that officials had unanimously supported a quarter-point increase in thepolicy rate in September. They considered economic activity solid and inflationrisks tilted to the upside. Those discussions should be considered alongsidemore recent data, including the slowdown in U.S. employment reported last week.
Tuesday’s data showed that the U.S. goods and services tradedeficit reached US$105.6 billion in August. In Canada, the merchandise tradesurplus increased to C$4.2 billion, with exports rising 2.5%. Statistics Canadanoted, however, that announced tariffs may encourage businesses to bringshipments forward. It is therefore too early to conclude that the improvementwill be sustained.
On Thursday, Middle East tensions and weather risks in theGulf of Mexico unsettled oil markets. Brent finished the session up 4.1%. Moreexpensive energy raises transportation and production costs, making inflationmore difficult to contain.
The Nasdaq also declined Thursday following a FinancialTimes report on OpenAI’s revenue. Yet TSMC’s September sales rose 54.6% yearover year, and Samsung’s preliminary estimates showed high profits. In ourassessment, demand for components remains strong, but earnings must justifyvaluations.
At 10 a.m. Friday, the University of Michigan’s consumersentiment reading came in at 46.3, compared with 48.1 in September. Consumers’one-year inflation expectations rose from 4.6% to 4.7%. The survey measuresperceptions rather than actual spending, adding context to the strength ofCostco’s sales.
In Canada, Friday morning’s data showed a loss of 68,300jobs in September and an increase in the unemployment rate from 6.4% to 6.5%.Job losses notably affected education and health care. Weaker employment contrasts with the improvement in trade, making it important to assess the Canadian and U.S. economies separately.
Market Overview
Friday morning quotes after the market open showed theS&P 500 up 0.80% from the previous Friday, the Nasdaq up 0.46% and the Dowup 0.39%. The S&P/TSX had nearly erased its weekly decline, at −0.04%. Therecovery in U.S. indices contrasted with persistent differences across sectors.
Costco and Chevron retained gains, while PepsiCo returnedclose to unchanged. Pacira remained sharply higher following its acquisitionagreement with Viatris. Humana advanced after improved ratings for its MedicareAdvantage plans, while SpaceX’s mobile ambitions weighed on telecommunicationsstocks.
Markets in Numbers
Weekly changes as ofOctober 9, 2026
Changes from the October 2 close to Fridaymorning quotes after the market open.
S&P 500: +0.80%
Nasdaq Composite: +0.46%
Dow Jones: +0.39%
S&P/TSX: −0.04%
Brent crude: +1.81%
WTI crude: +0.24%
U.S. 10-year yield: −1.1 bps
CAD/USD: −0.16%
CAD/USD uses an indicative foreign exchangemarket quote. One basis point (bp) equals 0.01 percentage point.
Stock Highlights
The first eight changes are weekly returnsthrough Friday morning. The final three show Friday’s session changes fromThursday’s close.
Costco (COST):+2.77% for the week
September net sales rose 13.0%.Comparable sales growth remained at 7.6% after excluding gasoline prices andforeign exchange effects.
Nvidia (NVDA):−1.27% for the week
The stock lost 2.94% Thursday asshares linked to artificial intelligence declined following the OpenAI report.It recovered slightly Friday morning.
PepsiCo (PEP):−0.01% for the week
Quarterly revenue rose 5.6%, butthe company lowered its forecast for annual adjusted earnings growth. Friday’sdecline erased nearly all of the earlier weekly gain.
Levi Strauss(LEVI): −7.30% for the week
Quarterly sales increased 4.3%and adjusted earnings improved. On Friday, the stock extended the decline seenfollowing its results.
Chevron (CVX):+2.91% for the week
After gaining 3.12% Thursday asoil prices rebounded, the stock advanced again Friday morning. Energy pricesremain an important factor for the sector.
TSMC (TSM):−4.07% for the week
September sales rose 54.6% yearover year but fell 0.6% from August. The U.S.-listed shares lost 3.01% Thursdayas semiconductor stocks declined.
Applied Digital(APLD): −7.33% for the week
Quarterly revenue reachedUS$341.9 million, up 322%. However, the loss from continuing operationsattributable to common shareholders remained US$221.0 million. The stockfinished Thursday almost unchanged (+0.17%) following the results, thendeclined Friday morning.
PaciraBioSciences (PCRX): +44.03% for the week
On Thursday, Viatris announcedan agreement to acquire Pacira for US$36.50 per share, representing a totalequity value of US$1.65 billion. The stock gained 44.40% that day. Thetransaction remains subject to closing conditions and regulatory review.
Humana (HUM):+12.57% Friday morning
The insurer announced that 95%of its Medicare Advantage members are enrolled in plans rated four stars orhigher for 2027. These ratings may expand eligibility for quality bonuspayments, although they do not guarantee future earnings.
AT&T (T):−6.48% Friday morning
AT&T, Verizon and T-Mobiledeclined following an agreement between SpaceX and Grain Management involving800 MHz spectrum. The project strengthens Starlink’s mobile ambitions, but thetransfer remains subject to approval by the FCC, the U.S. communicationsregulator.
Delta Air Lines(DAL): −0.90% Friday morning
Delta reported quarterlyadjusted earnings of US$1.72 per share and expects annual adjusted earnings ofUS$5.10 to US$5.60 per share. Demand remains strong, but the company mustabsorb elevated fuel costs. The shares were lower following the results.
Looking Ahead to Next Week
U.S. inflation and bank earnings
The Toronto Stock Exchange will be closed Monday, October12, for Thanksgiving. In the United States, September consumer inflation willbe released Wednesday, October 14, followed by producer prices Thursday,October 15. These reports will help distinguish the impact of energy frombroader price pressures.
JPMorgan Chase and Goldman Sachs will report earningsTuesday, October 13, with Bank of America and Morgan Stanley followingWednesday. Their comments on credit, household spending and transactions willhelp assess whether the strength seen in certain economic indicators is alsoreflected in financial activity.
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