Market Update for September 14, 2026

In October 2025 I cautioned all clients about what might be a lackluster 2026 for stocks.  This blog will review where that expectation stands, as we near the 1-year mark of the "call."

Looking back at monthly returns for 2026, three items starkly jump out at me.  One, the broad US stock market has made money 4 of the months and lost money the other 4 months.  Two, the S&P 500 lost about as much in March (down 5%) as it made back in May (up 5%).  And three, April 2026 was an extreme outlier as the S&P 500 increased 10.4% just in that month alone.

Looking back 20 years' time - and that includes the recovery from the global financial crisis of 2007-2009, mind you- the market has earned 10+% only three other times, and two of those times were during the wacky Covid-tinged 2020.   October 2011 was the only other month as good as this past April away from "Covid times."  Earnings were EXCEPTIONAL this spring, and by the end of April 63% of companies' earnings were out.  Add the halo effect that comes when a company that yet to report goes up in conjunction with a competitor who reports positive earnings, and that yields an outrageously good month for stocks.

As I write this blog post on September 14th, the S&P 500 is roughly flat since June 2nd.  The idea to avoid stocks this year has been a mediocre one, essentially ruined by the amazing April we had, as referenced above.  With that said, none of my clients are betting AGAINST the stock market- we simply made a number of moves to lock-in gains, and switch stocks to bonds last fall - moves that on net look to be unnecessarily cautious.  I also figured interest rates would abate, with or without the Fed's help, and in a surprise move to many market participants, rates have strengthened.  This has left bonds lagging on aggregate, with many actively-managed bond funds fighting to remain positive, and the "AGG" ETF (meant as a proxy for the bond market as a whole) down 1.3% on the year-to-date.

President Trump wants lower interest rates, always, and he supplanted Jerome Powell with Kevin Warsh to enact his dovish Fed wishes.  Mr. Warsh is his own person, however, and the data on the whole is compelling the Fed governors to consider RAISING rates rather than lowering them.  This stands in stark contrast to a year ago, when the Fed was lowering rates and anticipated to do so additionally into 2026 - reductions that never materialized this year, essentially due to too-strong economic data stoking inflation fears.  September 16th, October 28th, and December 9th are the remaining days where the Fed will announce any changes to its overnight lending rate, and those will be key dates for stock and bond market reactions indeed.

I will have another update on future thinking in the coming weeks, but as always I am watching the markets closely, and things seem to be getting more interesting after what for markets was a fairly boring summer.