September

Being down less than 50 BPS, the market cap weighted S&P fared better in September than its historical norm.  However, the equal weighted S&P was off nearly 5%.  The DJIA also had a tough month, whereas the NASDAQ bucked the trend with a positive return for the month.  For perspective, according to Stock Trader’s Almanac, the mean average returns for the month of September average (0.7)% for the S&P market cap weighed index, (0.8)% for the DJIA, and (0.9)% for the NASDAQ.  October is known to be a volatile month in the equity markets yet positive overtime.  

Strong Third Quarter Earnings

We remain in no-man’s land until October 13 when banks kick off third quarter earnings season in earnest.  Similar to earnings in Q1 and Q2, earnings should be strong in Q3.  In fact, according to FactSet, the current estimate is for year-over-year earnings to surpass 25% for the third consecutive quarter!  Valuations are attractive for the equity markets.  Per FactSet, Street consensus estimates bring the current multiple for earnings below the five- and ten-year averages, yet earnings growth is materially stronger than average.  This is encouraging for long-only equity investors!  This is why we remain bullish on the equity markets.

Concerns

However, not all data is as encouraging.  Geopolitical concerns continue.  High energy prices are causing headaches for central banks around the world as inflation remains elevated.  Interest rates on the long end of the yield curve remain too high.  Bond investors are losing money this year – reflected in the Bloomberg Aggregate Bond Index being down 2.7% YTD, as of yesterday’s close.  Corporate spreads over treasuries are widening.  Temporary blips, or a possible canary in the coal mine?  Watching closely.  For those interested in greater detail, please check out The bond market is acting Up.  Yields are rising.  Why? from our September 1 update: Market Update: Corporate Earnings are Booming! | Joyce Wealth Management, LLC

The Federal Reserve

After today’s weak employment data, the futures markets seem to suggest the FOMC might not need to raise rates at its upcoming October 28 meeting.  However, due to inflation remaining persistently too high (most recent PCE was up 3.4% year-over-year), it seems additional rate hikes are coming soon.  Of course, inflation data will supersede jobs data, therefore unless there is a sudden drop in pricing pressure, imagine we’ll see a hike at the December 9 meeting, if not before.  CPI and PPI will be out prior to the October FOMC meeting.

Putting it all Together 

Inflation remains stubbornly high, geopolitical risks are elevated, uncertainties of elections can cause noise, and we are in the early stages of what appears to be a Fed rate hiking cycle.  On the other hand, the bedrock of fundamental investing is corporate earnings which are incredibly strong.  Barring a macro event which could cause a slowdown in the outlook for corporate earnings, we remain bullish on the outlook for the market.  This is why it seems prudent for most equity investors to be fully invested by mid-October as we anticipate another strong quarter of earnings.  Hopefully, the historical sweet spot of November – January returns will live up to its historical average.

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Not an offer or Advice: This commentary is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any specific security or to adopt any particular investment strategy. The views expressed represent the current opinions of Joyce Wealth Management as of 10/02/26 and are subject to change without notice.