As summer winds down and September begins, investors are navigating a market shaped by strong
corporate profits, debates about the promise of artificial intelligence (AI), evolving monetary policy
expectations, and ongoing geopolitical conflicts. While volatility has increased at times, the backdrop for
investors remains fundamentally well supported.
One of the most important pillars supporting the backdrop for the stock market has been corporate profits.
Second quarter earnings growth for the S&P 500 is tracking to a stellar 31% excluding mark-ups of
investment holdings, while analysts continue to raise forecasts for the second half and 2027. Solid earnings
growth across a broad range of sectors has strengthened the fundamental case for stocks. If not for large
non-recurring charges by two healthcare companies, all 11 S&P sectors would have grown earnings by 9% or
more in the quarter.
At the same time, investor attention has remained squarely on AI. Recent results and commentary from
major technology companies have reinforced their confidence that AI investment will drive innovation and
profitable growth, even as market participants debate potential payoffs. Strong outlooks from leading
technology companies, including the world’s largest company NVIDIA and some software firms perceived as
vulnerable to disruption, have helped maintain investor enthusiasm and put a floor under most AI stocks.
Overall, we remain constructive on the stock market outlook, supported by robust and broadening corporate
profit trends, a resilient U.S. economy, and continued AI innovation. As appropriate, investors may want to
consider above-target weightings in stocks relative to bonds, while considering an allocation to diversifying
alternative investments to help mitigate potential volatility as midterm elections approach and monetary
policy and geopolitical uncertainty remain elevated. Also consider stocks have historically lagged in
September and early October, though less so after a strong eight months.
For fixed income investors, with inflation still sticky and rising odds of a Federal Reserve rate hike, we
continue to emphasize high-quality bonds while limiting interest rate sensitivity. Municipal bonds may offer
compelling income potential and provide diversification with yields elevated relative to recent history.
In sum, while higher interest rates, ongoing geopolitical conflicts, and midterm election-related policy
uncertainty may create short-term market swings, maintaining a disciplined, diversified investment
approach remains the most effective way to navigate a dynamic market environment. We will continue to
monitor market fluctuations to take advantage of potential opportunities that may emerge after Labor Day.
As always, please reach out to us with any questions or comments you may have.
Ryan Olson is a Registered Principal with and securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC CA Insurance Lic. #0E54474.
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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of September 2nd, 2026.