US equities may weaken in September, but the strength of corporate earnings and supply-demand conditions that supported August's gains, together with continued AI demand, underpin the view that the path to 8,000 points for the S&P 500 by year-end 2026 remains intact.
US equities performed strongly in August, with the S&P 500 gaining 2.6% and the Nasdaq 100 rising 4.2%. The market was supported by improving corporate earnings, better supply-demand conditions and healthy internal rotation.
The September outlook calls for attention to the impact of rising interest rates, while arguing that excessive pessimism based solely on seasonality is unwarranted. The market should instead be assessed by considering stock-price trends, corporate earnings, fund flows and geopolitical risks together.
Rising interest rates remain a challenge, but current levels cannot immediately be said to pose a major impediment to economic activity. An explanation is offered that some room remains based on the relationship between long-term interest rates and corporate profits.
The main support for the market is the resilience of corporate earnings and AI demand. NVIDIA's results, in particular, exceeded market expectations and are positioned as a symbol of the sustainability of AI demand.
While concerns over Iran and developments involving the president pose geopolitical risks, there are also reasons for optimism heading into the year-end market, and an outlook of 8,000 points for the S&P 500 at year-end 2026 has been presented.