I'll admit it. I was skeptical the bulls could claw their way back to all-time highs and finish the year strong. Too many crosscurrents, too many things that could go wrong at once.
Then the Fed hiked rates, and stocks basically shrugged.
The price action since the September rate decision tells you something important about where this market's conviction actually sits. Investors have been handed plenty of reasons to sell, yet the S&P 500 keeps going higher.
A Bull in Bear’s Clothing
Let's think about everything stacked against the stock market right now:
• The Fed just hiked rates for the first time since 2023, with its latest projections pointing to another quarter-point move before year-end.
• The 10-year Treasury yield has pushed above 5.2%, its highest level since 2007, while the 30-year hit its highest since 2004.
• Crude oil has been trading around $100 a barrel, with the Middle East conflict still unresolved. WTI crude briefly pushed well above $100 before falling back into the low 90s.
• Tariff uncertainty hasn't gone away either, as the US-China trade truce only got a two-month extension to January 10.
• The market remains heavily dependent on AI, leaving investors vulnerable to any meaningful disappointment in data center spending or the earnings outlook of the mega-cap technology companies.
And yet, the S&P 500 is back within striking distance of its record high. That's not a market limping along; it's a market absorbing bad news and finding buyers anyway.
Can the Bulls Keep Fighting Through the Headlines?
The honest answer is that they already are.
The important question isn't whether the risks exist; they clearly do. The question is whether they remain manageable enough for investors to keep looking through them.
So far, the earnings backdrop is giving the bulls plenty of reason to do exactly that.
According to the latest Zacks earnings outlook, S&P 500 earnings are expected to increase 24% year over year in the third quarter on 11.3% higher revenues.
Image Source: Zacks Investment Research
That matters because the earnings growth is broadening beyond a handful of mega-cap technology names. Zacks expects 14 of its 16 sectors to post positive earnings growth, with six delivering double-digit gains.
That gives the market a stronger fundamental foundation if AI spending or mega-cap earnings eventually cool.
The market doesn't need every headline to be bullish. It just needs earnings to remain strong enough for investors to look through the macro noise.
So far, that's exactly what's happening.
The Catalysts That Will Decide It
The next ten weeks will get interesting, and the bulls can have their way if a few catalysts turn neutral to positive.
Several major events are packed into a relatively short period, and the market doesn't need every one of them to go perfectly. It simply needs the outcomes to remain within a range that doesn't materially damage the earnings or inflation story.
Let’s start with Micron on September 30.
Micron reports its fiscal fourth-quarter results at the end of the month, making it one of the first major tests of the AI infrastructure spending story. The stock is one of the best-performing S&P names this year, up over 250%, and positive results should keep the momentum going.
The company's latest results showed just how strong the memory cycle has become. Micron said HBM4 was in high-volume shipments for its lead customer's platform, with additional customer qualification underway, while it expects HBM4E volume production in 2027.
Continue . . .
------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------
Another strong report and outlook would give investors a data point supporting the idea that AI infrastructure spending remains an earnings driver heading into the fourth quarter.
Image Source: Zacks Investment Research
Then comes the much bigger event: third-quarter earnings season.
This is where the hyperscalers become critical. Microsoft, Amazon, Alphabet, and Meta have all been major contributors to the AI infrastructure spending cycle, so their capital expenditure commentary will provide the clearest tests of whether companies are still willing to spend aggressively on AI.
If the hyperscalers continue to raise or maintain ambitious infrastructure spending plans, the market gets another reason to look past high valuations, elevated rates and geopolitical uncertainty.
The next catalyst comes on the geopolitical front.
The overhang got lighter on the tariff front this week. Ahead of Xi's Washington visit, the US and China extended their trade truce from November 10 to January 10, taking a Q4 deadline off the table. It's only a two-month patch, but the market got what it needed in stability and calm.
The bulls don't need a sweeping trade deal. They just need the truce to hold and the talks to keep moving in the right direction.
Iran is of course the other worry, but the market has looked past the conflict for months. And now talks with the US have reportedly entered a "technical stage", which could ultimately lead to some end to the war. Any real progress would ease pressure on oil, and with it some of the inflation fears driving yields higher.
The market doesn't need perfection to go higher. It needs oil to stay contained, yields to hold steady, and the Fed's next move to stay limited to what's already priced in.
The Fed Wildcard
Two meetings remain in 2026, on October 27-28 and December 8-9, with fresh inflation and employment data arriving between now and then. The Fed's latest projections point to another quarter-point increase by year-end.
These meetings create another potential test for the market, with the language and commentary extremely important.
If inflation remains manageable and the Fed's tightening path stays relatively contained, investors may continue to look through higher rates as long as earnings remain strong.
But if inflation accelerates sharply, oil stays elevated, and the Fed is forced to signal substantially more tightening, the calculation changes.
Rates aren't the bulls' enemy right now. An inflation surprise is.
The Path to 8,000 For the S&P 500
The market has had multiple opportunities to break down. Instead, buyers have kept stepping in, pouring money into tech and the AI trade.
I watch the technical picture closely, and it just flipped from bearish to bullish.
The day the Fed hiked, the S&P 500's 100-day moving average was tested. It held strong, and since then, the market has been all bid, breaking above the 50-day MA, 21-day MA, and September highs.
That's why 8,000 plus on the S&P 500 doesn't look unreasonable as a year-end destination. And the Nasdaq 100 (NDX) looks even more ripe, with a Fibonacci extension near 33,000, about 8% above current levels at the time of this writing.
Image Source: TradingView
8,000 for the S&P wouldn't require a speculative blow-off rally; it would simply require the market to continue doing what it has already been doing:
Absorbing the bad news while earnings provide support.
Bottom Line: The Bulls Don't Need Everything to Go Right
The Fed can remain hawkish, oil can remain elevated, geopolitical tensions can continue, and trade uncertainty can linger.
The bulls don't need those risks to disappear. They just need them to remain moderate enough that they don't overwhelm the earnings story.
The S&P 500 is coming off one of its strongest earnings-growth quarters in years, as AI spending continues to support the technology complex.
That's why I'm looking for the S&P to close above 8,000 this year.
How to Find Profit Opportunities in Today's Market
Focusing on healthy companies with strong fundamentals and future growth is essential. Long-term investing can exponentially increase your profit potential. It can also help protect your portfolio during pullbacks and corrections.
Today, you can get unrestricted access to real-time buys and sells from all our long-term portfolios, covering several strategies, including growth, value, dividends, and more.
To help you make the most of this historic investing opportunity, we've opened up our Zacks Investor Collection, a bundle of our top subscription services for long-term investors. It's made for markets like this.
Over the next 30 days, for the total cost of only $1, you're welcome to catch all of the real-time buy and sell signals from all of our long-term investor portfolios, including...
• Real-time buys, sells, and market commentary from Stocks Under $10, Home Run Investor, Value Investor, ETF Investor, Income Investor, and Zacks Top 10 Stocks.
• Plus, you'll get full access to our powerful research, tools, and analysis, including the Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener, and more, as part of Zacks Premium.
Using the Zacks Rank, our experts have already closed 21 double- and triple-digit winners this year. While not all picks will be winners, gains have reached as high as +121%, +218%, and +230%. ¹
Free Bonus Report: If you act quickly, you'll also get our exclusive Special Report, 5 Stocks Set to Double. It reveals 5 companies poised for immediate breakout. Each stock was selected because of its superior short-term profit potential under current market conditions.
So please don't wait. The earlier you get in, the greater profits you stand to make.
Click the link below. This unique $1 opportunity ends at midnight Sunday, September 27.
Access Zacks Investor Collection and our exclusive 5 Stocks Set to Double Special Report now >>
Good Investing,
Jeremy Mullin
Zacks Stock Strategist
Jeremy Mullin is a stock strategist who combines the fundamental power of the Zacks Rank, technical analysis, and computer-driven trading to find the best trades. Discover all his current recommendations in the Commodity Innovators and Zacks Counterstrike Newsletter.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
View the Zacks #1 Rank List
Image: Bigstock
How the Bulls Could Finish 2026 at All-Time Highs
I'll admit it. I was skeptical the bulls could claw their way back to all-time highs and finish the year strong. Too many crosscurrents, too many things that could go wrong at once.
Then the Fed hiked rates, and stocks basically shrugged.
The price action since the September rate decision tells you something important about where this market's conviction actually sits. Investors have been handed plenty of reasons to sell, yet the S&P 500 keeps going higher.
A Bull in Bear’s Clothing
Let's think about everything stacked against the stock market right now:
• The Fed just hiked rates for the first time since 2023, with its latest projections pointing to another quarter-point move before year-end.
• The 10-year Treasury yield has pushed above 5.2%, its highest level since 2007, while the 30-year hit its highest since 2004.
• Crude oil has been trading around $100 a barrel, with the Middle East conflict still unresolved. WTI crude briefly pushed well above $100 before falling back into the low 90s.
• Tariff uncertainty hasn't gone away either, as the US-China trade truce only got a two-month extension to January 10.
• The market remains heavily dependent on AI, leaving investors vulnerable to any meaningful disappointment in data center spending or the earnings outlook of the mega-cap technology companies.
And yet, the S&P 500 is back within striking distance of its record high. That's not a market limping along; it's a market absorbing bad news and finding buyers anyway.
Can the Bulls Keep Fighting Through the Headlines?
The honest answer is that they already are.
The important question isn't whether the risks exist; they clearly do. The question is whether they remain manageable enough for investors to keep looking through them.
So far, the earnings backdrop is giving the bulls plenty of reason to do exactly that.
According to the latest Zacks earnings outlook, S&P 500 earnings are expected to increase 24% year over year in the third quarter on 11.3% higher revenues.
Image Source: Zacks Investment Research
That matters because the earnings growth is broadening beyond a handful of mega-cap technology names. Zacks expects 14 of its 16 sectors to post positive earnings growth, with six delivering double-digit gains.
That gives the market a stronger fundamental foundation if AI spending or mega-cap earnings eventually cool.
The market doesn't need every headline to be bullish. It just needs earnings to remain strong enough for investors to look through the macro noise.
So far, that's exactly what's happening.
The Catalysts That Will Decide It
The next ten weeks will get interesting, and the bulls can have their way if a few catalysts turn neutral to positive.
Several major events are packed into a relatively short period, and the market doesn't need every one of them to go perfectly. It simply needs the outcomes to remain within a range that doesn't materially damage the earnings or inflation story.
Let’s start with Micron on September 30.
Micron reports its fiscal fourth-quarter results at the end of the month, making it one of the first major tests of the AI infrastructure spending story. The stock is one of the best-performing S&P names this year, up over 250%, and positive results should keep the momentum going.
The company's latest results showed just how strong the memory cycle has become. Micron said HBM4 was in high-volume shipments for its lead customer's platform, with additional customer qualification underway, while it expects HBM4E volume production in 2027.
Continue . . .
------------------------------------------------------------------------------------------------------
See All Zacks' Long-Term Picks for $1
Through good markets and bad, one unique stock-picking method has clobbered the market's average gain with an incredible +23.8% per year.
To help you take advantage of opportunities in today's market, we're opening the vault to reveal all our long-term recommendations. You'll see stocks priced under $10… income investments… hidden value stocks and more.
Our private long-term investing services have closed 21 double- and triple-digit wins so far this year. Although we can't guarantee 100% success, recent gains have reached as high as +121%, +218%, and +230%. ¹
All for just $1.
Special opportunity ends at midnight Sunday, September 27.
Get Picks Now >>
------------------------------------------------------------------------------------------------------
Another strong report and outlook would give investors a data point supporting the idea that AI infrastructure spending remains an earnings driver heading into the fourth quarter.
Image Source: Zacks Investment Research
Then comes the much bigger event: third-quarter earnings season.
This is where the hyperscalers become critical. Microsoft, Amazon, Alphabet, and Meta have all been major contributors to the AI infrastructure spending cycle, so their capital expenditure commentary will provide the clearest tests of whether companies are still willing to spend aggressively on AI.
If the hyperscalers continue to raise or maintain ambitious infrastructure spending plans, the market gets another reason to look past high valuations, elevated rates and geopolitical uncertainty.
The next catalyst comes on the geopolitical front.
The overhang got lighter on the tariff front this week. Ahead of Xi's Washington visit, the US and China extended their trade truce from November 10 to January 10, taking a Q4 deadline off the table. It's only a two-month patch, but the market got what it needed in stability and calm.
The bulls don't need a sweeping trade deal. They just need the truce to hold and the talks to keep moving in the right direction.
Iran is of course the other worry, but the market has looked past the conflict for months. And now talks with the US have reportedly entered a "technical stage", which could ultimately lead to some end to the war. Any real progress would ease pressure on oil, and with it some of the inflation fears driving yields higher.
The market doesn't need perfection to go higher. It needs oil to stay contained, yields to hold steady, and the Fed's next move to stay limited to what's already priced in.
The Fed Wildcard
Two meetings remain in 2026, on October 27-28 and December 8-9, with fresh inflation and employment data arriving between now and then. The Fed's latest projections point to another quarter-point increase by year-end.
These meetings create another potential test for the market, with the language and commentary extremely important.
If inflation remains manageable and the Fed's tightening path stays relatively contained, investors may continue to look through higher rates as long as earnings remain strong.
But if inflation accelerates sharply, oil stays elevated, and the Fed is forced to signal substantially more tightening, the calculation changes.
Rates aren't the bulls' enemy right now. An inflation surprise is.
The Path to 8,000 For the S&P 500
The market has had multiple opportunities to break down. Instead, buyers have kept stepping in, pouring money into tech and the AI trade.
I watch the technical picture closely, and it just flipped from bearish to bullish.
The day the Fed hiked, the S&P 500's 100-day moving average was tested. It held strong, and since then, the market has been all bid, breaking above the 50-day MA, 21-day MA, and September highs.
That's why 8,000 plus on the S&P 500 doesn't look unreasonable as a year-end destination. And the Nasdaq 100 (NDX) looks even more ripe, with a Fibonacci extension near 33,000, about 8% above current levels at the time of this writing.
Image Source: TradingView
8,000 for the S&P wouldn't require a speculative blow-off rally; it would simply require the market to continue doing what it has already been doing:
Absorbing the bad news while earnings provide support.
Bottom Line: The Bulls Don't Need Everything to Go Right
The Fed can remain hawkish, oil can remain elevated, geopolitical tensions can continue, and trade uncertainty can linger.
The bulls don't need those risks to disappear. They just need them to remain moderate enough that they don't overwhelm the earnings story.
The S&P 500 is coming off one of its strongest earnings-growth quarters in years, as AI spending continues to support the technology complex.
That's why I'm looking for the S&P to close above 8,000 this year.
How to Find Profit Opportunities in Today's Market
Focusing on healthy companies with strong fundamentals and future growth is essential. Long-term investing can exponentially increase your profit potential. It can also help protect your portfolio during pullbacks and corrections.
Today, you can get unrestricted access to real-time buys and sells from all our long-term portfolios, covering several strategies, including growth, value, dividends, and more.
To help you make the most of this historic investing opportunity, we've opened up our Zacks Investor Collection, a bundle of our top subscription services for long-term investors. It's made for markets like this.
Over the next 30 days, for the total cost of only $1, you're welcome to catch all of the real-time buy and sell signals from all of our long-term investor portfolios, including...
• Real-time buys, sells, and market commentary from Stocks Under $10, Home Run Investor, Value Investor, ETF Investor, Income Investor, and Zacks Top 10 Stocks.
• Plus, you'll get full access to our powerful research, tools, and analysis, including the Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener, and more, as part of Zacks Premium.
Using the Zacks Rank, our experts have already closed 21 double- and triple-digit winners this year. While not all picks will be winners, gains have reached as high as +121%, +218%, and +230%. ¹
Free Bonus Report: If you act quickly, you'll also get our exclusive Special Report, 5 Stocks Set to Double. It reveals 5 companies poised for immediate breakout. Each stock was selected because of its superior short-term profit potential under current market conditions.
So please don't wait. The earlier you get in, the greater profits you stand to make.
Click the link below. This unique $1 opportunity ends at midnight Sunday, September 27.
Access Zacks Investor Collection and our exclusive 5 Stocks Set to Double Special Report now >>
Good Investing,
Jeremy Mullin
Zacks Stock Strategist
Jeremy Mullin is a stock strategist who combines the fundamental power of the Zacks Rank, technical analysis, and computer-driven trading to find the best trades. Discover all his current recommendations in the Commodity Innovators and Zacks Counterstrike Newsletter.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.