Five for Friday – October 2, 2026

Earnings, Yields, Iran, Seasons, and Halloween

1. Profit

This year has seen no shortage of market-moving events, but if one trend defines these first nine months, it’s almost certainly the strength in corporate profits. The growth in expected S&P 500 earnings over the first nine months of 2026 essentially matches the best rolling 9-month period of this century (including recession recoveries, when growth rates are boosted by comparisons to a weak starting point).

Can it continue? Trees don’t grow to the sky, but positive signposts remain. For instance, the number of S&P 500 companies issuing positive guidance (expectations for profitability) is way above the historical average. Per FactSet, the number for third quarter earnings sits at 62%, dwarfing the 10-year average of 42%. And while corporate executives are not immune to bouts of over-optimism, they tend to have the clearest sightlines into future business conditions. And because public companies’ disclosures operate under significant regulatory scrutiny, management has a strong incentive to make grounded and reasonable projections.

 2. Yields

Of course, strong profits don’t prevent market ups and downs. Over the last few months, rising yields and geopolitical tensions have added volatility to markets. On yields, we have two short pieces – here and here – breaking down the action and the implications.  

3. Iran

Regarding geopolitical tensions, the situation in Iran remains as clear as its pitch-black crude oil. While we are heartened that flows seem to be recovering, an end to the conflict is difficult to game out given the hard-drawn lines on both sides and the region’s competing interests. All said, I find it hard to get too defensive for the same reasons that we laid out in April 2025: if policy largely levied by executive authority is weighing on markets (then, tariffs; now, combat), there’s the possibility of a quick reversal that sends markets shooting higher. When the Liberation Day tariffs were paused five days later on April 9 (sending the market to its best day in five years), it wasn’t the end of trade turmoil or tariff threats as policy, but it did mark a trough in stock prices. All to say, if the administration decides the Iran conflict is weighing too heavily on its political goals and cuts a deal, lower oil and lower yields could act like jet fuel for markets, especially given the strength in profits and economic activity.  

4. Seasons

Should an Iran deal occur, it would likely be even more potent given the seasonal tailwinds at the market’s back. Over the last 75 years, there were 56 times that the market was positive from Jan. to Sep.; The average return from Oct. to Dec. for those years was 5.4% (with a positive return for 89% of the time). For the other 19 years (that were down over the first three quarters), the average return for the final quarter was less than 4%, with a positive return 68% of the time. That’s still quite good, however, in part because Q4 has historically been the best quarter (+5.0%), a fact that is turbocharged for midterm years (+7.6%).  

5. October

also brings Halloween, on which U.S. consumers are expected to spend a record $13.5 billion this year. Spider-man is expected to be the most popular costume, further increasing the superhero’s grip on consumer wallets in 2026.    

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.

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