Rise Advisors Market Outlook October 2026
Transcript Below
Hi, everybody. Good afternoon. And on behalf of all of us at Rise Advisors, I want to take a moment to thank you for watching our market update for what is October of 2026. So we sit here and I try and not give exact dates, but a lot of that matters in this particular market update. So we're sitting here on Friday, October 23rd, and October 22nd, the Thursday was a bit of a bloodbath. And so we had originally planned on doing a pretty large rebalance of client accounts on that Thursday the 22nd, but we've seen some trials and tribulations in the market. So for most of October, we were seeing a very beaten up bond market with yields peaking right around kind of the first week of the month. And then we saw equity markets that have kind of stumbled along through what has been a really strong earning season.
Well, yesterday we got quite the washout. Massive reversal in treasury yields, pretty steep tech selloff. So the timing of this video works really well as we've rescheduled that rebalance to a couple weeks out. And so today I want to focus on some key things. I want to focus on earnings expectations and where earnings season has come in. I want to focus on kind of how institutions are positioning. An interesting anecdote around financial conditions and how restrictive they may or may not be. And then just a quick outlook or summary as we head into year-end and midterm elections. So, on the earnings front, and this is a fascinating chart by duality research and what it keeps looking at is the fact that analysts going into every earnings season keep saying, "This is the point where basically earnings roll over," meaning they've peaked, they roll over, we start to see some contraction in earnings of the S&P. So when we look at this chart, the green line is where earnings growth have come into play and the purple line is the historical projections. And you can see how much those expectations have increased and how at every point when analysts keep saying, "This is where kind of earnings growth starts to die on the branch," the market keeps dominating. And so why this matters is each of those new estimates have come in higher and the rollover of the earnings expectations keeps getting pushed out to the right. So right now we're looking at 38.7% earnings growth, earlier projections for this point of 2026 were between 10 and 12%. It's astonishing how strong earnings growth has been. Now, with earnings, I think it's worth taking with a grain of salt. This is a chart that we got from ChartKid Matt that basically says, you know, when you look at Q3 earnings, where they're being reported on an actualized basis, in the S&P 500 year over year, we're looking at 24.6% earnings growth from where we were for the end of Q3 2025. Leading sector should not be a surprise. Energy up almost 137% year over year. And 10 of the 11 sectors in the S&P for companies that have reported thus far have been positive from an earnings growth standpoint. I then want to take a look at blended earnings growth. So taking a look and say, okay, so we have the companies that have actually reported. We have plenty of companies that are still to report. What does that look like? A lot of the big names have reported, so therefore you'll see that a lot of the expectation and what has happened for the S&P itself remains consistent at 24.6%. Energy still leading the charge. Obviously, $100 oil really helps with that. There's a couple of other sectors that really get some pickup because they have some big pieces that need to still report. Materials being one of those, industrials being another, and even technology. There's some big tech names whose earnings are coming next week. Next week's going to be a pretty great week for the market one way or another, and we'll find that out. But one of the interesting things, earnings you can kind of fiddle with, right? So when we talk earnings, there's earnings per share, there's EBITDA, there's all these different things, and there's all these adjustments. So you'll see earnings per share, adjusted earnings per share, so on and so forth. One of the things though that's hard to fib is revenue. So when we're talking revenue, we're talking top line sales. When we're talking earnings, we're talking what's being reported, the net net after expenses. So when we look at revenue growth year over year for the third quarter, so third quarter of 2026 compared to the third quarter of 2025, the S&P has revenue growth up 12.3%. That is absolutely astonishing. The leading sector from a revenue growth standpoint is technology. Now, there's a lot of talks about the fact that Technology feels circular. A lot of these hyperscalers are paying the chip makers and they're paying the industrial, yada, yada, yada. At the end of the day, this is still really strong earnings growth, and a lot of it is being driven by the fact that there's demand in the economy, and that's why the market hasn't necessarily turned over as sharply as it could, because sales are existing across almost every single sector. Every one of the 11 gig sectors is positive from a year-over-year revenue growth standpoint. This is an interesting chart that feeds into a lot of what we're feeling as far as sentiment. So, there's a famous quote, and I've shared it in so many of these videos. It's the be greedy when others are fearful and be fearful when others are greedy. And so if you go back to our September market update, one of the big things that we talked about in that September market update is there's a ton of noise in the bond markets. Yields are spiking, the national debt is getting brought into focus, there's concerns over AI debt and what's taking place. And we reminded folks that default rates are at historic lows. Bonds serve an important part in your portfolio and you shouldn't be panicking rushing elsewhere. That story is now being built up here in October, but on the equity side of the equation. And so since May, you've seen money steadily move out of the market. So when you look at institutional manager positioning, we have consistently seen over the last four or five months about 300 basically billion dollars shift within the markets, and a lot of that is moving out of equity markets into fixed income, into alternatives, into different areas. And so with that, I think what's really important when we look at where institutional flows are coming is when you have institutional positioning shift dramatically and the market doesn't respond, then institutional money has to come back into play. And this is a constant theme that we see kind of this time of year in equity markets. You have managers thinking that the bull market's coming to an end, things are going to slow down, they position themselves on the sidelines, the noises and narratives build up, but earnings and revenue growth come in at expectation. And then you see a lot of these managers come mid-November, Thanksgiving timeframe, start to dump that money in because they have to catch up to their benchmark, and that's where a Santa Claus rally kind of comes into play. So we think that that institutional positioning and the money being moved out of equity markets over the last four or five months is actually probably a good sign that some of the stress and fear is overstated. This week, there was a piece that Jensen Huang basically put out, CEO of Nvidia, where he talked about the fact that the appetite for a lot of their products and a lot of chips and a lot of hardware and things that are tied to the AI trade and AI implementation, the appetite by companies is through the roof, there's a lack of capital. And what that applies is, is that people are being, feeling constrained or feeling restricted based on the economic conditions that exist. Torsten Slok, the chief economist of Apollo is a person we've referenced a lot in these videos over the years, and they ran a survey of small to mid-sized businesses and basically said, "How do you feel that the decisions of your firm are being shaped by the financial conditions that exist today?" 81% of those CFOs replied that they did not feel constrained, implying that the decisions that they're making have nothing to do with the cost of capital. What that tells us is that a lot of businesses don't feel that monetary policy is restrictive. And so that's kind of in direct conflict with what Jensen Huang was saying. And so if we wanted to put our tin hole foil hats on and have a little bit of concern with what's taking place in markets in the short term, it's this belief that you have a lot of these big privately held AI giants, the OpenAIs, the anthropics of the world, so on and so forth, coming out and saying, "Hey, we need this regulation. We need to slow things down. We need to be concerned about AI." At the same time, you're hearing a lot of people with chatter about the fact that they're not really feeling and seeing the return on investment that they were expecting with some of these AI agents or some of these AI tools. And at the same time, you have this belief that, oh, the economy's too restrictive, that's why the money's not flowing. But CFOs are really starting to say, "Hey, this isn't restrictive. We're just maybe not deploying the capital to these resources because we're not seeing the return on investment." This was the worry we talked about earlier in the year when it came to the AI trade specifically and what's taken place in technology. So this is something we're keeping an eye on, because if we don't start to get beyond that infrastructure build out of the AI and get real use cases, that's where we think we start to get into some of the bubbly concerns that could exist. So we'll keep an eye on that. We'll report back to that in a future update. And so with that, it's always important that we end these videos the same way we tend to always do. The most important thing we can do investors is be patient. The worst is never the worst, the best is usually not the best. It's important to remember that over time, markets kind of revert to the averages. So, in the equity markets right now, we're going to be patient. We're not going to give into the fear. We're not going to give into the geopolitical concerns. We're not going to give into midterm election concerns and what's the impact of this or what's the impact of that? We're going to stay the course. It's important to keep in mind that fundamentals look really strong. Q3 earnings look fantastic. Revenue growth looks really strong. Every, every sector is growing for the most part on a revenue side and earnings growth looks pretty strong. It's important to keep in mind too that we have that money on the sidelines, not we as in Rise Advisors, but there's a lot of institutional money on the sidelines. It's likely that sideline money makes a return over the next 30 to 45 days and that forced buying to end the year should be a net positive for equity markets. And on the bond side of it, this really feeds into what we talked about once again in September. Yields have started to ease. The fear and concern within the bond market is starting to become understated relative to some of the fears that you're seeing in equity markets. So with that, we've seen yields come down aggressively. That's a good thing for the bond assets that we have. You look at a day like October 22nd where the NASDAQ's down 2.6%, the aggregate bond index is positive over 1%. That's what they're there for, that's why those bonds exist. So, fear seems to have peaked, yields seem to be coming down, and it's important that you keep bonds in the mix. I don't think it's too late where if you are over allocated to equities and you wanted to add some of that bond exposure, I don't think it's too late on that, but be patient as you start to do so because the, the Fed meeting next week on the 28th, it's probably going to be a big nothing burger, but we are still expecting a rate hike in December. We'll see what brings with that. So, with that being said, if you have questions about your portfolio or what we're doing at Rise Advisors, don't hesitate to reach out to myself or Mark or Stephanie or any of our staff advisors at Rise. We hope you have a great rest of your October, and we'll be back around Thanksgiving time to update you on where things stand. Thank you and have a great rest of your week.
This presentation is for Informational purposes only.
All investment strategies including rebalancing and diversified asset allocation have risk. Past performance of our investment approach, component holdings and methods does not guarantee future results. Advisory services offered through Rise Advisors, LLC ("Rise") Registered Investment Advisor. While all data is believed to be from reliable sources, accuracy and completeness are not guaranteed.