Monday, 10/19/2026 a.m.

• Stocks trade higher to begin the week – U.S. equity markets are trading higher on Monday, led by a rebound in technology shares after the Nasdaq Composite declined roughly 4.5% last week. Market leadership remains narrow in early trading, with technology and consumer discretionary stocks firmly higher while most other S&P 500 sectors are flat to lower. Overseas, Asian markets finished mixed, while European equities are trading lower as political unrest and uncertainty in France weigh on sentiment. The U.S. economic calendar is relatively quiet today, shifting investors’ attention toward corporate earnings later this week. Meta and Tesla will headline the earnings calendar when they report after the market closes on Wednesday. After declining last week, Treasury yields are modestly higher to begin the day, with the 10-year yield trading near 5.1%.
   
• Earnings in focus – Corporate earnings will remain a key focus this week, with Meta and Tesla reporting after the market closes on Wednesday. The reporting season has been encouraging to date, following broadly positive updates from several large U.S. financial services companies last week. Among the roughly 10% of S&P 500 companies that have reported third-quarter results, approximately 85% have exceeded analysts’ earnings expectations, with an average upside surprise of 3.4%. At the index level, S&P 500 third-quarter earnings are expected to increase by roughly 27% year over year, with the energy, technology and communication services sectors expected to make strong contributions. While elevated inflation and tightening monetary policy pose risks to the economic and earnings outlook, underlying activity has remained resilient. Consumer spending remains solid, and manufacturing activity has improved after a multiyear period of stagnation. In this environment, we continue to view equities as more attractive than fixed income, favoring U.S. large- and mid-cap stocks along with emerging-market stocks. Investors should be sure to evaluate these opportunities in the context of their financial goals and risk tolerance.
   
• Stocks approaching seasonally favorable period with solid momentum – U.S. equities took a breather last week, with the tech-heavy Nasdaq falling roughly 4.5% and the S&P 500 declining about 2%. Concerns about debt-funded investment tied to the AI buildout weighed on technology stocks, while elevated inflation and rising oil prices also pressured investor sentiment, in our view. Despite the pullback, returns in 2026 remain strong, and the S&P 500 is on pace for a fourth consecutive year of double-digit gains. While we believe fundamentals and economic conditions ultimately drive stock prices, the final three months of the year have historically been favorable for markets. Since 1950, the S&P 500 has generated an average October return of approximately 0.9%, with positive returns 59.2% of the time.* Looking ahead, returns have historically averaged about 1.9% in November and 1.4% in December, with gains occurring approximately 69.7% and 72.4% of the time, respectively.* Although there is no guarantee that these historical patterns will continue in 2026, we believe resilient economic activity and strong corporate profit growth could support further equity-market gains through year-end.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet
Source for cited data: *FactSet, Edward Jones Calculations, S&P 500 Price Index.}