Andrew Beatty, of LPL Financial, consults with GenWealth as their Chief Investment Officer.

As summer winds down and we move into September, investors are watching a market shaped by strong corporate profits, ongoing debate about the promise of artificial intelligence (AI), shifting expectations for monetary policy, and continued geopolitical tension. Volatility has picked up at times, but the underlying backdrop for investors remains fundamentally well supported.

Corporate Profits Remain a Key Pillar

One of the biggest supports for the stock market this year has been corporate earnings. Second quarter earnings growth for the S&P 500 is tracking to a stellar 31%, excluding mark-ups of investment holdings, and analysts continue to raise their forecasts for the second half of 2026 and into 2027. Strong earnings growth across a broad range of sectors has reinforced the fundamental case for stocks. In fact, if not for large non-recurring charges at two healthcare companies, all 11 S&P sectors would have grown earnings by 9% or more this quarter.

AI Continues to Capture Investor Attention

Alongside earnings, investor focus has remained squarely on AI. Recent results and commentary from major technology companies have reinforced confidence that AI investment will drive innovation and profitable growth, even as market participants continue to debate the size of the eventual payoff. Strong outlooks from leading tech names — including the world’s largest company, NVIDIA, along with some software firms once seen as vulnerable to AI disruption — have helped sustain investor enthusiasm and put a floor under many AI-related stocks.

Our Outlook

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 also considering an allocation to diversifying alternative investments to help manage potential volatility as midterm elections approach and monetary policy and geopolitical uncertainty remain elevated. It’s also worth noting that stocks have historically lagged during September and early October, though history suggests this tends to be less pronounced following a strong first eight months of the year.

A Note on Fixed Income

For fixed income investors, with inflation still sticky and the odds of a Federal Reserve rate hike rising, we continue to emphasize high-quality bonds while limiting interest rate sensitivity. Municipal bonds may offer compelling income potential and added diversification, with yields elevated relative to recent history.

The Bottom Line

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 environment. We’ll continue monitoring market fluctuations to help identify potential opportunities that may emerge.

This material is for general information and educational purposes only and is not intended to provide specific advice or recommendations for any individual. Investing involves risk including the loss of principal. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. GenWealth Financial Advisors and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.

The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly.

Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Bonds are subject to availability, change in price, call features and credit risk. Bond yields are subject to change. Certain call or special redemption features may exist which could impact yield.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Asset allocation does not ensure a profit or protect against a loss.