The market is now entering the fourth quarter and midterm election season—a combination that has historically been favorable for stocks. Year to date, the S&P 500 has gained 12.8%, trailing the Nasdaq, which is up nearly 17%.
Since World War II, the S&P 500 has risen in 85% of fourth quarters, with an average gain of 6.4%. The period has also typically ranked as the second-strongest quarter in the 16-quarter presidential cycle.
Last Week Market Recap:
The Nasdaq Composite climbed 1.2%, marking its third straight weekly gain even as bond yields rebounded. The S&P 500 rose 0.7%, and the Dow added 251 points, or 0.5%.
But the week was less upbeat for the broader market. Both the S&P 500 and the Dow ended lower. The equal-weighted S&P 500, where every company counts equally, fell for a seventh consecutive week; its longest losing streak since 2022.
This Week’s Key Earnings and Economic Events:
Investors are entering a season that has typically been strong for U.S. stocks, but this year’s gains face several headwinds. Bond yields have surged, and concerns are growing about how much the market relies on heavy spending on artificial intelligence.
As the fourth quarter begins, the S&P 500 is up nearly 13% in 2026 and sits about 1% below its mid-August record high.
The weeks ahead are packed with potential market-moving events, including the start of earnings season, a key Federal Reserve meeting, and the November 3 midterm elections, which will determine control of Congress.
Key Market Catalysts to Watch This Week:
Markets Look for Clues on the Fed’s Next Rate Move
Investors will be watching Wednesday afternoon for the minutes from the Federal Reserve’s Sept. 15–16 meeting. The Fed raised rates for the first time since 2023, and policymakers indicated another increase could come before the end of the year. The minutes may reveal how firmly or tentatively officials were leaning toward another hike.
A busy slate of economic reports is also on tap. The Institute for Supply Management’s services-sector index is due Monday, followed by August trade data on Tuesday. Friday brings the University of Michigan’s preliminary October consumer sentiment survey, which will offer a fresh look at how consumers see inflation.
Can Stocks Repeat Their Typical Fourth-Quarter Rise?
Since 1945, the S&P 500 has gained an average of 4.2% in the fourth quarter, rising in 85% of those periods, according to CFRA. Midterm-year fourth quarters have tended to do even better, with an average gain of 6.4%. Investors may find relief once election uncertainty fades, CFRA chief investment strategist Sam Stovall said in a note.
The fourth quarter has also typically been the second-strongest stretch of the 16-quarter presidential cycle. When the index has finished the quarter higher, its average gain has been 6.4%.
Amazon Kicks Off 48-Hour Prime Big Deal Days Sale
Amazon will kick off Prime Big Deal Days on Tuesday, offering discounts across its marketplace for 48 hours. The fall promotion is a smaller counterpart to its summer Prime Day event, and other big retailers are expected to join in. Walmart, for instance, will run its own “Walmart Deals” sale throughout the week.
The sales come as U.S. e-commerce growth has picked up for four consecutive quarters, a trend that has surprised many investors, according to Bernstein analysts. They say more effective advertising, aided by AI, and resilient consumer spending have helped drive the gains. This week’s event will offer another early read on shoppers’ appetite ahead of the holiday season.
Strong Earnings Growth Expected as AI Spending Draws Scrutiny
PepsiCo and Delta Air Lines are among the few major companies reporting third-quarter results this week. The earnings season will pick up next week when the big banks begin reporting.
Corporate profits have beaten already-high expectations this year, helping drive the stock market higher. That strong performance has also raised expectations for the next round of results. S&P 500 earnings are forecast to grow more than 30% from a year ago in the third quarter, according to LSEG IBES. Investors will also be looking for updates on AI infrastructure spending, which has helped lift profits across many industries.