Good morning: Investors' worries about the Fed, inflation, AI, and geopolitical uncertainties have done little to blunt the stock market's positive momentum, with the major indexes at or near record levels. All in, the S&P 500 is up about 10% year to date even with last week’s selloff. Some believe this favorable market reality is making many believe that underlying economic fundamentals are strong enough to sustain the rally; others not so much. Stocks need power to push higher, just as humans and machines do. For stocks, this power comes from a variety of sources, but interest rates and corporate profits are the biggest sources.

Corporate earnings have been very strong in recent quarters, and the ongoing Q3 2026 earnings season is reconfirming this favorable backdrop. For Q4 2026, the expectation currently is that S&P 500 earnings will increase by +28.5% from the same period last year on +12.5% higher revenues. We are in the midst of the midterms; anything can happen, but beyond election day is a long time, and the setup is excellent. Earnings and interest rates are important factors in market direction. Low unemployment and high growth rates make for a good economy. Perfect? No, it isn’t perfect, but it isn’t bad either, and that is the point. Have a great week, and call with questions.

Source: “Why the Stock Rally Has Legs: The Unstoppable Earnings Engine Behind Record Highs.” Weekend Wisdom. Zacks Investment Research. Mian, S. 10/30/2026

Regards,
Don

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The S&P Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value-weighed index with each stock’s weight in the Index proportionate to its market value. Index returns are not fund returns. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.</sub>