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Strong earnings growth and positive estimate revisions support the market outlook.
IVV, VOO, SPY and SPYM offer exposure to the S&P 500 for long-term investors.
The stock market continues to show remarkable resilience, shrugging off a series of economic and political challenges that would normally unsettle investors.
The S&P 500 has gone 52 consecutive trading sessions without a daily decline of 1% or more, matching a streak that ended in July 2024, according to Global Markets Investor, as reported by Yahoo Finance. If the benchmark avoids such a drop in the current session, it will extend the run to its longest since January 2020, when the index went 74 trading days without a 1% slide.
The streak is particularly notable given the headwinds facing Wall Street, including sticky inflation, a hawkish Fed and uncertainty surrounding the upcoming midterm elections. Yet, investors appear largely unfazed, keeping the market's upward momentum intact.
Broad-Based Selling Remains Unusually Rare
The market's resilience extends beyond the S&P 500's performance. Global Markets Investor also highlighted an unusual trend on the New York Stock Exchange: 224 consecutive trading sessions without a day when declining stocks accounted for at least 80% of total trading volume. That marks the longest such streak since at least 1996, as mentioned in the same Yahoo Finance article.
In other words, the market has gone nearly a year without an episode of exceptionally intense, broad-based selling on the NYSE. The trend suggests that investors have generally continued to hold equities rather than rush for the exits during periods of uncertainty.
Strong Earnings Expectations Support Stocks
One factor helping sustain investor confidence is the outlook for corporate profits. Total S&P 500 earnings in Q3 are currently expected to increase 24.3% from the same period last year on 11.5% higher revenues.
If that estimate holds, it would mark the eighth straight quarter of double-digit growth, as quoted on Yahoo Finance. Total Q3 earnings for the 19 S&P 500 members that have reported results already are up 150.9% from the same period last year on 27% higher revenues, with 78.9% beating EPS estimates and 73.7% beating revenue estimates.
The revisions trend remains positive, sustaining the favorable revisions trend that has been in place for a year now. Since the start of Q3, earnings estimates have moved higher for half of the 16 Zacks sectors. We are seeing a similar trend for Q4 and full-year 2027 as well.
Expectations remain upbeat for the final quarter of 2026, with analysts forecasting 27.4% year-over-year earnings growth on 11.9% revenue growth. Expectations for first-quarter 2027 earnings are also at double digit of 22.0% over 10.7% revenue growth.
These projections provide a fundamental underpinning for the market's resilience, even as inflation, monetary policy and political uncertainty remain potential sources of volatility.
Midterm Uncertainty Unlikely to Rattle Wall Street
Historical market trends provide one reason for the optimism. The S&P 500 has delivered positive returns in every one-year period following a midterm election since 1946, according to Truist chief strategist Keith Lerner, as quoted on Yahoo Finance.
In the 12 months before midterm elections, U.S. stocks have returned an average of just 2.9% compared with 8.9% across all years. In the 12 months after, they have averaged 12.4%, per Tucson.com.The very source pointed out that J.P. Morgan data revealed that markets begin rallying just under a month before election day, averaging 6.6% in the election quarter.
U.S. holiday retail sales are expected to hit a record $1 trillion-plus during the November-December shopping season, according to Bain & Company. Sales are projected to rise 4.5% year over year, faster than the 3.5% growth seen in 2025.
The above discussions point to the fact that despite rising rate worries, index funds like the S&P 500-based ETFs, including iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) , State Street SPDR S&P 500 ETF Trust (SPY - Free Report) and State Street SPDR Portfolio S&P 500 ETF (SPYM - Free Report) , could be good picks for the medium term and can be bought at the rising-rate-induced dips.
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S&P 500 ETFs Defy Rate Worries as Earnings Outlook Strengthens
Key Takeaways
The stock market continues to show remarkable resilience, shrugging off a series of economic and political challenges that would normally unsettle investors.
The S&P 500 has gone 52 consecutive trading sessions without a daily decline of 1% or more, matching a streak that ended in July 2024, according to Global Markets Investor, as reported by Yahoo Finance. If the benchmark avoids such a drop in the current session, it will extend the run to its longest since January 2020, when the index went 74 trading days without a 1% slide.
The streak is particularly notable given the headwinds facing Wall Street, including sticky inflation, a hawkish Fed and uncertainty surrounding the upcoming midterm elections. Yet, investors appear largely unfazed, keeping the market's upward momentum intact.
Broad-Based Selling Remains Unusually Rare
The market's resilience extends beyond the S&P 500's performance. Global Markets Investor also highlighted an unusual trend on the New York Stock Exchange: 224 consecutive trading sessions without a day when declining stocks accounted for at least 80% of total trading volume. That marks the longest such streak since at least 1996, as mentioned in the same Yahoo Finance article.
In other words, the market has gone nearly a year without an episode of exceptionally intense, broad-based selling on the NYSE. The trend suggests that investors have generally continued to hold equities rather than rush for the exits during periods of uncertainty.
Strong Earnings Expectations Support Stocks
One factor helping sustain investor confidence is the outlook for corporate profits. Total S&P 500 earnings in Q3 are currently expected to increase 24.3% from the same period last year on 11.5% higher revenues.
If that estimate holds, it would mark the eighth straight quarter of double-digit growth, as quoted on Yahoo Finance. Total Q3 earnings for the 19 S&P 500 members that have reported results already are up 150.9% from the same period last year on 27% higher revenues, with 78.9% beating EPS estimates and 73.7% beating revenue estimates.
The revisions trend remains positive, sustaining the favorable revisions trend that has been in place for a year now. Since the start of Q3, earnings estimates have moved higher for half of the 16 Zacks sectors. We are seeing a similar trend for Q4 and full-year 2027 as well.
Expectations remain upbeat for the final quarter of 2026, with analysts forecasting 27.4% year-over-year earnings growth on 11.9% revenue growth. Expectations for first-quarter 2027 earnings are also at double digit of 22.0% over 10.7% revenue growth.
These projections provide a fundamental underpinning for the market's resilience, even as inflation, monetary policy and political uncertainty remain potential sources of volatility.
Midterm Uncertainty Unlikely to Rattle Wall Street
Historical market trends provide one reason for the optimism. The S&P 500 has delivered positive returns in every one-year period following a midterm election since 1946, according to Truist chief strategist Keith Lerner, as quoted on Yahoo Finance.
In the 12 months before midterm elections, U.S. stocks have returned an average of just 2.9% compared with 8.9% across all years. In the 12 months after, they have averaged 12.4%, per Tucson.com.The very source pointed out that J.P. Morgan data revealed that markets begin rallying just under a month before election day, averaging 6.6% in the election quarter.
According to data from Bloomberg and Deutsche Bank, the S&P 500 has done well in past midterm election cycles, rising 21 out of the last 23 times, per Motley Fool, as reported by Yahoo Finance. Meanwhile, the largest gain took place in 1998 amid the dotcom bubble (read: Midterm Uncertainty Unlikely to Rattle Wall Street ETFs: Here's Why).
Holiday Spending Set for Strong Growth
U.S. holiday retail sales are expected to hit a record $1 trillion-plus during the November-December shopping season, according to Bain & Company. Sales are projected to rise 4.5% year over year, faster than the 3.5% growth seen in 2025.
Meanwhile, Mastercard Economics Institute expectsU.S. retail sales, excluding autos and gas, to rise 5.5% year over year from Nov. 1 to Dec. 24, marking the strongest holiday growth since 2022. This is another indication that the broader market will remain steady in 2026 (read: Holiday Spending Set for Strong Growth: ETFs in Focus).
S&P 500 ETFs to Play?
The above discussions point to the fact that despite rising rate worries, index funds like the S&P 500-based ETFs, including iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) , State Street SPDR S&P 500 ETF Trust (SPY - Free Report) and State Street SPDR Portfolio S&P 500 ETF (SPYM - Free Report) , could be good picks for the medium term and can be bought at the rising-rate-induced dips.