Welcome to the fourth quarter, investors. The stock market has hit multiple record highs this year and all signs past and present point to more to come over the next three months. I just spoke about this on a segment at the New York Stock Exchange, too.

Here we go.

September did not bring its usual gloom to the stock market. 

The S&P 500 finished positive in what’s typically the weakest month of the year for investors, bucking decades of history to the benefit of the bulls.

The index advanced 3.5% in September on account of earnings momentum, the start of a Fed rate-cutting cycle, and continued enthusiasm around artificial intelligence.

That resilience now carries stocks into the final and best quarter of the year.

Since 1950, the S&P 500 has averaged a 4.2% gain from October to December, with positive returns 80% of the time.

When the quarter ends higher, the average gain increases to 7%. 

“Seasonal headwinds didn’t materialize this month, and investors may now turn their attention to the historically strong fourth quarter,” said Adam Turnquist, chief technical strategist for LPL Financial. 

Seasonality looks even more favorable when you account for market peaks. 

Since 1980, the S&P 500 has topped out in the fourth quarter 71% of the time, and in December half the time, according to DataTrek Research. 

That suggests September’s rally was a prelude to more of the same.

Meanwhile, the fundamental backdrop remains just as robust.

Wall Street analysts have been raising — rather than cutting — earnings estimates for 2025 and 2026, which is unusual for this time of year.

While it’s true that Big Tech has made the market extremely top-heavy, earnings growth for the sector is nonetheless expected to outpace the broader index by a wide margin.  

The Fed offers another tailwind through the end of the year.

Markets see overwhelming odds for rate cuts in October and December, and with job growth slowing and core CPI holding steady, policymakers have cover to ease without stoking inflation fears.

If Friday’s jobs report publishes within range of expectations and earnings continue to deliver, history and fundamentals will remain aligned for a strong finish. 

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📊 A government shutdown won’t hurt the stock rally. Any disruption from Washington could halt the momentum for investors but it would likely be brief. The US has seen 20 such closures over the last 40 years, with the average shutdown lasting 8 days and having minimal market impact. (Barron’s)

🛢 Berkshire Hathaway is set to secure its biggest deal since 2022. Warren Buffett’s conglomerate is negotiating to acquire Occidental Petroleum’s petrochemical business for roughly $10 billion, and it could come together this week. (WSJ)

🏦 Another Fed official wants more rate cuts. Boston Fed President Susan Collins said lowering interest rates further could be appropriate due to a diminished threat of higher inflation and rising risk for unemployment. (Yahoo Finance)

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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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