Rise Advisors Market Outlook September 2026
Transcript Below
Hi, everybody. This is Zach Harrington from Rise Advisors. And on behalf of all of us at Rise Advisors, I want to take a moment and thank you for watching our market update for what is September of 2026. So, in today's video that we've put together, you're getting some real time reactions. So, for reference point, it is about 2:30 on September 16th, and Kevin Warsh, for the first time, has just raised interest rates during his time as the Fed chair, and the first time since July of 2023, which is the last time we saw a rate hike. So, we'll get to that later on in today's video, but just kind of what the market expected, markets reacting accordingly, bond market seems to be taking a breath. We'll see what comes with that.
So, for today's agenda, you'll see it right up here on the screen. I want to revisit a chart from March that I think is very interesting and just a very important reminder of sometimes we just got to block out the noise and just stay committed to our allocation. We'll talk through our normal sector performance, kind of sector valuations. We'll review some market growth charts. We'll talk through some of our thoughts and opinions around that Fed rate hike, and then we'll talk through kind of where we go from here to end the year. So, I want to show this first chart. This is a chart that was in our March market update video. And so the cool thing with this chart is this was coming fresh off of the oil shock that we experienced where oil that had been really consistently in like the kind of low 50s, mid 50s a barrel had spiked all the way up into the 100, 110 range. And people were panicking. Markets were panicking, people were concerned. And so, this chart basically showed what does the S&P 500 do over the following one month, three months, six months, one year after there's an oil shock like this. So, in my lifetime, going back to 1990, we've had now 13 instances of this. And I thought it was timely to bring this back up because we are six months removed from when this data was initially published. So, when we look at this chart, what's really important to keep in mind is basically from March 3rd through the Labor Day weekend, the S&P was up over 12% during that timeframe. So, if you went back to those first week of March and oil markets are panicking and everybody's freaking out, we reminded you in our March video, the market doesn't care about this noise. The energy sector only makes up a certain amount of the S&P 500. You have the consumer side of the economy, which really isn't driving a ton of the growth and performance. And as long as corporate America can continue to deliver on the earnings per share growth that it has shown, things were going to be fine. That's exactly what's panned out. Now, what's important to keep in mind is we have had this persistent shock over the last six months, which has led to some of the inflationary issues, which has led to this quarter basis point rate hike. And I do think things are a little bit different here six months in than where they were back in March. But if you blocked out the noise and plugged your nose and closed your eyes, your equities are up another 12% over that timeframe. So, let's just check in on sector performance. So, this is our usual kind of duality research update chart, and this is looking at year to date. So, we're looking at price return, we're looking at earnings per share growth, and we're looking at multiple expansion or contraction in some cases. And what I want to focus on is the first column all the way to the left, which is price return. So, when we're looking at price return, you have an S&P 500 that threw 37 weeks was up 11.9% total. You had energy leading the way up 44.5%, which we have an overweight to in our models. Now, when we made this overweight last fall, we did not anticipate Maduro being captured and invading Iran, but here we are and we got lucky with that decision. You have technology coming in second up 23%, and you can see based on market cap weightings and things associated that you have a market that's kind of chugged along. But you've seen some shifting since we last showed this chart. Healthcare, which is one of the lagging sectors for the year, is now really creeping up some of those performance metrics, which is a good sign because we do have an overweight to healthcare. And the other thing we wanted to focus on was that earnings growth as well as multiple contraction in most cases. So, when we look at things on an earnings per share growth basis, the market basically year to date has grown earnings 29%. And you have a market that just from the start of the year is trading at a multiple, based on future earnings, 13% less than where it did to start the year. The market is cheaper than where it was in January of 2026. It is cheaper than where it was in January of 2025. It's even cheaper or in kind of in alignment with where it was in January of 2024. So, you have a market that since January of 2024 is up, you know, tens of percents that is actually cheaper on a price to earnings basis. Corporate America remains on fire. Now, what's important to keep in mind is there are basically two sectors in which there was multiple expansion, meaning that those sectors specifically got more expensive, but they make sense. Real estate, cost of capital is increased, the insurance cost inputs, all of those things. There's only so much consumer appetite on the real estate side. So having a multiple expansion there can make sense. And then consumer staples. There's only so much price and inflation that producers can pass on to consumers before they stop and start making different decisions with their pocketbooks. It all kind of makes sense to us. Looking at things once again from a valuation standpoint, I think what's really important to keep in mind here is how discounted still the energy sector is. So, you have an energy sector that's only trading at 14.6 times future earnings ratio. Very, very reasonable, above its five-year average, but well below its 10-year average. You have a healthcare sector that's also trading below the market. And overall, these are really healthy valuations, especially when you look at where the earnings have continued to come in. I thought this was a cool chart to include. When I was sitting down and showing this to Chris a few days ago, he really liked these growth charts. And so, think about this chart here as like when you were going to the doctor with your children. I have, you know, a four and a half and a two and a half year old, and we'll go and we'll look at where they sit on the percentile map or what growth chart they're sitting on. And this hammers home the point I already made. We had a market that was trading at about 22 times forward looking earnings in January of 2026. It was trading at 22 times forward looking earnings in January of 2025, trading around 20 times forward looking earnings in January of 2024. You have a market today that's trading at 19 times forward looking earnings. And so, if this market continues over the next year, year and a half to trade at that similar multiple in earnings deliver, you're looking at a market sitting at about 9,200 to start 2028, still really solid total return numbers. And let alone if we get some multiple expansion or even some multiple contractions, this still is a really healthy market. Now, this does lead us into the rate hiking side of things. And so, Duality Research put out a great paper on Monday before you even had the Fed rate decision today on Wednesday, and they titled it “Be Careful What You Hike For”. And I think this is a really important thing for all of us to understand. At the end of the day, the Fed hiking rates 25 basis points, or as Kevin Warsh has hinted, even another 25 basis points to end the year is not the end of the world. The worry or real risk to the bull market, there's an old saying on Wall Street, "Bull markets don't end, they get killed." And so, what's important to keep in mind there is if we start to get back into such a restrictive rate environment where the bond market is having 6% yields and 6.5% yields and we have another 100 or 150 basis point of rate hikes, eventually we reach a level where the CapEx spending and the growth is going to slow because of how restrictive money is. And if that's the case, that's the worst kind of scenario here for the market. If corporate America cools off the way the consumer side of the economy has, that's the slowdown, that's the pullback, that's the contraction in valuations, that's the contraction in earnings, and that's kind of our bear market scenario. But if we get to a point here over the next few months where we get a rate hike here in September, perhaps we get another one to end the year and then things start to normalize, that's the best case. Let inflation get under control. Let the bond market take a breath. Let the bond investors who are pressuring policymakers and saying, "Hey, if you're not going to take inflation seriously, that's fine." But your days of borrowing and deficit spending to the tune of trillions of dollars a year and not taking inflation seriously is going to come with a price. And that's what we saw when yields crept up from 3.9 to over 5% between the time, we invaded Iran and this rate hike in September. But there's a real chance, depending on what Kevin Warsh says and where dot plots come in, that the yields actually cool in the face of hiking rates. So, our kind of base case is another rate hike here to end the year. Inflation starts to normalize as we get some sort of resolve in the energy markets, whether that's a resolution in Russia and Ukraine, whether that's a resolution with Iran and some of the shipping channels in the Middle East. But if we can get some energy prices to cool, if we can get inflation to be tampered down by some more restrictive policy decisions, I think the bond market cools, the stock market persists because it does remain really strong. Now, that isn't to say there still isn't plenty of upside and downside with both things. So where do we go from here? We're sitting here at the end of the third quarter going into the start of the fourth quarter, and it's really important that we do exactly what we talk about in all these videos, which is remain consistent to our allocation and control what we can control. So, if you're an asset allocated investor here in September of 2026, it's a great time to revisit rebalancing your portfolio. So, on a year-to-date basis, your bonds are probably down anywhere from one to 3%, depending on how far you're out on the yield curve, and your equities are up anywhere from, let's say, 10% to 20%, depending on where you are as far as sector specific, position specific, or even which side of the market are you more growth-oriented or more value-oriented. When you have that level of discrepancy in performance between your stocks and bonds at any point, you can get what's called style drift, which in times of market uncertainty can be a damper to you because you don't have the allocation you though you have. So now is a great time to focus on rebalancing your portfolio. Look at what is drifted above your target allocation, and this is what we're doing behind the scenes. We're looking at it and saying, "Hey, our overweight to energy that's up over 40% year-to-date, wonderful. We probably should trim some gains out of that." We're looking at our overall equity exposure and saying, "Hey, you know, our 65% stock model has drifted up to almost 70%. We probably should trim some of that back." The other nice thing is when you're an investor in a bond, it's always important to look at what is our upside potential versus our downside risk. And we've talked about this ad nauseum over the six years I've done these videos at Rise. When yields go up, price goes down. So as yields have moved into the 5% range on a 10-year treasury, prices have depreciated. The same is true as yields start to stabilize and come back down. Now that yields are up, you're going to get more income on your bond portfolio, but it also gives you more upside potential if the base case pans out. If the rate hikes stabilize, if yields start to creep down, the Fed gets into a more kind of neutral rate environment throughout 2027. You're looking at realistically at 10% to 12% total return potential in your bond portfolio over the next two calendar years. So be patient, stay the course, and rebalance and can control what you can control. That's what our plan is, that's what we're going to implement here in the month of October. And as always, if you're an existing client of Rise and you have any questions about what's taking place in the market, what's taking place in your portfolio or anything in general, don't hesitate to reach out to myself or Mark or Stephanie or Chuck or Angelica or anybody on our team. And if you're not an investor at Rise and you'd like a second opinion on what's taking place within your portfolio here in September of 2026, don't hesitate to reach out to any of us. We wish you a wonderful back to school and start of fall. Have a wonderful rest of your day and we'll talk soon. Thank you.
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.