Summer is winding down, but the market's momentum isn't. As September opens, investors are weighing a compelling mix: blockbuster corporate profits, an ongoing debate over artificial intelligence's true payoff, shifting expectations for monetary policy, and simmering geopolitical tensions. Volatility has flared up at times, but make no mistake — the foundation underneath this market remains solid.

Earnings are doing the heavy lifting. Second-quarter S&P 500 earnings growth is tracking to a remarkable 31%, excluding investment mark-ups — and analysts keep raising the bar for the second half of the year and into 2027. This isn't a narrow rally propped up by a handful of winners: strength has been broad-based. Strip out large one-time charges from two healthcare companies, and all 11 S&P sectors posted earnings growth of 9% or better. That's a market standing on solid ground.

AI remains the story everyone's watching. Major technology companies continue to back their AI bets with real conviction, reinforcing the case that this investment wave will fuel innovation and profits — even as skeptics question when (or whether) the payoff fully arrives. Confident outlooks from bellwethers like NVIDIA, the world's largest company, along with software firms once seen as vulnerable to AI disruption, have kept enthusiasm alive and put a floor under AI-related stocks.

Our take: we remain constructive on stocks, backed by broadening profit growth, a resilient U.S. economy, and continued AI momentum. Where appropriate, investors may want to lean into above-target stock allocations relative to bonds, while adding diversifying alternative investments as ballast against the bumps that midterm elections, monetary policy shifts, and geopolitical headlines could bring. Worth noting: September and early October have historically been softer months for stocks — though history also shows that pattern tends to be milder after a strong eight-month run like this one.

On the fixed income side, sticky inflation and rising odds of a Fed rate hike keep us favoring high-quality bonds while staying cautious on interest rate exposure. Municipal bonds stand out here — yields are elevated relative to recent history, offering both attractive income potential and valuable diversification.

Bottom line: higher rates, geopolitical friction, and midterm-related policy noise could stir up short-term turbulence. But a disciplined, diversified approach remains the surest way to navigate it. We'll be watching closely for opportunities that emerge as we move past Labor Day.

As always, I'm just a call or email away if you have questions. Thank you for the continued trust you place in us.

Adam Vartanyan, CFP®

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. This material is intended for informational and educational purposes only and does not constitute investment research, a research report, or a recommendation regarding any specific security or issuer. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. Any securities or company names discussed in this material for illustrative purposes should not be construed as investment advice or recommendations. All data is provided as of September 2, 2026. All index data from FactSet. The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Past performance does not guarantee future results. Asset allocation does not ensure a profit or protect against a loss.