STOCK MARKET RECAP SEPTEMBER 2026
Stock prices have drifted slightly lower over the last month. The S&P 500 is down about 2% over the last month while the Nasdaq has fallen 1%.
The chart below shows the price change of the Nasdaq and the S&P 500 since the beginning of the year.
Stocks fell in the first three months of the year due to the Iran war. Prices then rose sharply in April and May with the Nasdaq gaining 25% and the S&P increasing 17%. Since the beginning of June, prices have been holding steady.
For the year, stock market returns have been good – the Nasdaq is up 14% and the S&P is up 11.6% for the year.
Currently, we are in a very strange time for the stock market.
There are lots of very positive signs and lots of very negative signs for stocks.
The economy remains quite strong. GDP growth is accelerating – driven heavily by AI spending. Unemployment remains low and is holding steady.
Corporate profits are growing at a record pace and profit growth drives stock prices. Earnings for the S&P 500 companies grew by 12% in 2025 – well above the long-term average of roughly 8%. Excluding the Mag 7 companies, earnings grew by 9% in 2025 – closer to the norm.
Profit growth has been exceptional in 2026. S&P 500 earnings are expected to increase by 29% in 2026. The big tech companies are driving a lot of this growth, but the median growth rate is expected to be 14% for all of the S&P 500 companies.
AI stocks and related technology stocks have posted huge increases for the year. Semiconductor stocks are up 50% for the year, and AI index funds are up over 30% for the year. AI bubble concerns still exist but sales and earnings growth for tech companies has showed no signs of letting up.
Inflation, interest rates and the war in the Middle East are the big problems right now for stocks.
Oil is back up to over $100 a barrel after it had fallen to $72 in July. The war is escalating and expanding with no end in sight.
Because of the war and its impact on prices for all goods, the Fed increased interest rates this week by one quarter of a percent.
It is difficult to see a way out of the conflict in the Middle East at present.
Stay Disciplined My Friends,
Phil
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