Quarterly Update: Q3 2026

The third quarter was a quieter tape than the second, not a weak one. Profits stayed strong. Inflation stayed above the Federal Reserve’s goal. Bonds priced in a higher path for rates. Our working view is that earnings, not the November election, matter more for the next twelve months.

The quarter in markets

The S&P 500 closed September 30 at 7,651.54. That was a 2.03% price gain for the quarter and an 11.77% price gain for the year to date. The index finished 1.89% below its August 13 closing high of 7,798.99.^{1, 2}
The Dow Jones Industrial Average closed at 50,906.05, down 0.9% on the final day and up 5.9% for the year. The Nasdaq Composite closed at 26,861.06, up 15.6% for the year. The Russell 2000 closed at 2,796.86.²
On June 30, the last session of the second quarter, the S&P 500 closed at 7,499.36. The second quarter itself was the strong one: the index rose 14.9% on a price basis. The third quarter added a smaller gain on top of that.³

These are price returns. They do not include dividends, fees, or taxes. They are not the returns of any Rigden Capital Strategies account. You cannot invest directly in an index.

Earnings

Second-quarter reporting is complete. FactSet’s blended S&P 500 earnings growth was about 52% year over year. Removing Alphabet and Amazon, whose results included large investment-related gains, left growth near 34%. About 86% of companies beat the earnings estimate, versus a five-year average near 78%.⁴
Revenue growth in the second quarter was about 15%, the fastest since late 2021. The net profit margin was 17.0% in FactSet’s series, a high for that series back to 2009.⁴
Third-quarter reporting is just starting. As of October 2, FactSet expected S&P 500 earnings growth of 29.5% and revenue growth of 12.3%. On June 30 the earnings estimate was 26.7%, and on September 18 it was 28.9%. Analysts raised numbers into reporting season, which is not the usual pattern. If 29.5% holds, it would be a third straight quarter above 25% and an eighth straight quarter of double-digit growth.^{5, 6}
A different aggregator, Zacks, had a lower third-quarter earnings estimate of 24.1% as of October 1, with revenue growth of 11.6%. We cite both so the range is visible. Either figure is still double-digit growth.⁷
For the full year, FactSet on October 2 expected S&P 500 earnings growth of 32.4% in 2026 and 27.6% in the fourth quarter. LSEG I/B/E/S, cited by Reuters on October 1, had a higher full-year figure, more than 35%, and about 15% for 2027. Aggregators do not treat one-time gains the same way. The direction is the same: 2026 growth is high, and 2027 is expected to slow.^{6, 8}

Company names in this section explain index math. They are not recommendations to buy, hold, or sell any security.

Inflation and the labor market

Both are in a middle place. Neither is a crisis. Neither is back to the Federal Reserve’s goal.

The Consumer Price Index was up 3.4% over the twelve months ended August. Core CPI, which excludes food and energy, was up 2.4%. The August monthly increase was 0.4% for the headline index and 0.3% for the core index. September CPI had not been released when this note was prepared.⁹
The personal consumption expenditures price index, the measure the Federal Reserve uses, was up 3.4% over the twelve months ended August, according to FRED.¹⁰
On September 16 the Federal Open Market Committee raised the federal funds target range by 0.25 percentage point, to 3.75%–4.00%. The vote was 12–0, the first increase since July 2023. The median projection was a 4.1% funds rate at the end of 2026 and 2027, 2026 PCE inflation of 3.7%, and a return to 2% inflation in 2029. The effective funds rate was 3.88% at the end of September.^{11, 12}
Unemployment was 4.1% in August. Employers added 162,000 jobs. Average hourly earnings were up 3.1% over twelve months. Labor-force participation was 61.6%. The broader U-6 underemployment rate was 7.7%. September employment data were scheduled for October 2 and are not in this note.¹³
Real GDP rose at a 2.2% annual rate in the second quarter on the latest FRED reading. The committee’s September median for 2026 growth was 2.3%.^{10, 11}
That is the “not bad, not great” reading. Jobs are still being added and unemployment is low. Inflation is no longer near the 2022 peak, but it is not at 2%, and the policy rate has started to move up again.

The bond market and oil

The 10-year Treasury yield was 5.26% on September 29 in the Federal Reserve’s H.15 release, and about 5.24% on September 30 in market compilations. The 2-year was 4.89% on September 29. The 30-year was 5.59%.^{12, 14}
Those yields sit above the 3.75%–4.00% funds range. The curve is pricing a higher path for inflation and policy, not a near-term cut. Mortgage quotes tracked that move and were reported near 7% in mid-September.¹⁵
West Texas Intermediate spot crude was $96.16 a barrel on September 29, down from mid-September prints near $105. Brent futures settled September 30 near $96.50, after trading above $100 earlier in the month. EIA’s Europe Brent spot series was still above $110 on September 29, so spot and futures did not match on the last days of the quarter. Oil is lower than mid-September and still a source of headline inflation risk.^{16, 17}

The good, the bad, and the ugly

The good

Profits. Second-quarter growth was strong even after the two largest one-time contributors are removed. Third-quarter estimates have been revised up, not down.^{4, 6}
The labor market was still adding jobs in August, and unemployment was 4.1%.¹³
The index rose in the quarter even after a rate increase that markets had largely priced. A priced hike is a different event from a surprise hike.^{1, 11}

The bad

Inflation was 3.4% on both CPI and PCE in August. The committee does not have 2% in its median path until 2029.^{9, 10, 11}
A 10-year yield near 5.25% raises the discount rate on future cash flows and the cost of a new mortgage.¹²
Gains have not been even. The Nasdaq is up 15.6% for the year. The Dow is up 5.9%. Small-company indexes lagged large-cap indexes into the quarter-end.²

The ugly

Oil and shipping risk can move headline inflation without a change in domestic demand. A 0.25 percentage point rate move does not reopen a pipeline.¹⁶
Index earnings are still concentrated. A handful of firms, including the large technology platforms and the companies selling equipment for data centers, account for a large share of the growth. Breadth improved in the second quarter. Breadth is not the same as equal contribution.⁴
The next policy meeting is October 27–28. The median dot already includes one more increase this year. That is a projection, not a vote.¹¹

How we are positioned in more balanced and conservative accounts

In accounts whose written objective is more balanced or more conservative, we have tilted the equity sleeve toward higher-quality dividend payers: durable cash flow, manageable debt, and a record of paying and, where the business supports it, raising the dividend. This is a description of current construction inside an existing policy. It is not a change to the signed Investment Advisory Agreement, and it is not a suggestion that every reader should own the same securities.

The reason is the mix in front of us. Earnings are strong. The policy rate is higher than it was in August. Long yields are near 5.25%. A growing dividend is one way to get paid while we wait, without needing the index multiple to expand.¹²
This is not a claim that dividend stocks will beat the S&P 500, and we are not presenting any account or strategy return. Dividend stocks can lag when a small group of growth companies leads the index, as they have this year. They can also fall when bond yields rise, because a dividend is compared with the yield on a Treasury. A company can cut a dividend. Quality does not remove that risk.
We are not abandoning the broader market. Growth accounts and accounts with a longer horizon still hold companies tied to the capital-spending cycle. The dividend tilt is a matter of degree, and it is larger where the written objective is income and a smoother path. It may not be suitable for every investor.

Why we still expect markets to be higher over the next twelve months

This is the Investment Committee’s opinion. It is not a price target, not a guarantee, and not a projection of any client account.

Earnings are the reason. A year in which S&P 500 profits are expected to rise by roughly 30% or more, with a third straight quarter of growth above 25% if current estimates hold, is a different backdrop from a year in which profits are falling.^{6, 8}
Through mid-September the index had not kept pace with the earnings revision. FactSet reported that expected earnings over the next twelve months had risen 8.8% from June 30 to September 18, while the price gain in the third quarter was 2.03%. On that arithmetic, the market paid a lower multiple for the next year of earnings than it did at mid-year. That comparison is as of September 18, not a live valuation.^{1, 5}
We do not need a lower policy rate for that view. We need earnings to come through close to what companies and analysts have already described, and we need a long yield that does not move sharply higher from here.
The risks to the view are plain. Another rate increase, a renewed rise in oil, a miss on third-quarter guidance, or a policy outcome outside the range discussed below could interrupt it. A twelve-month opinion is not a twelve-month promise. Past results do not predict future results.

The election

Election Day is November 3. All 435 House seats and about one-third of the Senate are on the ballot. We do not expect the election, by itself, to be the main driver of markets over the next twelve months, unless the result is outside the range markets are already discussing. Earnings, inflation, and the bond market have been the larger inputs this year.

Two results would change that reading. One is a Democratic supermajority, meaning control large enough to pass contested fiscal legislation without the other party. In practice that is 290 seats in the House and 67 in the Senate. The other is a Republican hold of both the House and the Senate.
Neither is the base case in current prices. On October 1, Kalshi and Polymarket each priced a Democratic House near 92% and a Republican House near 8% to 9%. A Democratic Senate was near 62% and a Republican Senate near 38% on both markets. Seat models clustered near a Democratic House in the low 230s and a Democratic Senate near 51. Those are majorities. They are not supermajorities.¹⁸
Prediction-market prices are wagers, not polls and not a forecast by Rigden Capital Strategies. They can move. A polling error of a few points would be enough to change the Senate. This section is not an endorsement of any candidate or party.
A divided Congress, or a modest majority in both chambers, has not historically been a single reason to raise or cut a long-term allocation. We would revisit that only if the seat count pointed to a supermajority or to one party holding both chambers against the current odds.

What we are doing with this

We are not changing written objectives because of one quarter or one election. Policy lives in the Investment Advisory Agreement and, where one is in place, the Investment Policy Statement.
We are using the earnings season to test the twelve-month view. If guidance steps down in a broad way, the view steps down with it.
In more balanced and conservative accounts, the dividend tilt stays in place while yields are high and earnings are still growing. It is a tilt, not a replacement for diversification, and it is not a performance claim.
Rebalancing, tax-aware harvesting, and cash-flow planning remain the tools we use when prices move. Those tools do not require a call on November 3.

Sources

Numbers in the text correspond to the entries below. Rigden Capital Strategies has not independently audited every underlying figure. Figures are as of the dates stated and will not be updated except by a later posted note.

Dow Jones Market Data / Morningstar, “S&P 500 Rises 2.03% This Quarter to 7651.54,” September 30, 2026. Quarter price return +2.03%; year-to-date price return +11.77%; August 13 closing high 7,798.99; 1.89% below that high. Preliminary closing values.
Associated Press, “How major US stock indexes fared Wednesday 9/30/2026.” S&P 500 7,651.54, year-to-date +11.8%; Dow 50,906.05, year-to-date +5.9%; Nasdaq Composite 26,861.06, year-to-date +15.6%; Russell 2000 2,796.86.
CNBC, stock-market wrap for June 30, 2026. S&P 500 close 7,499.36; second-quarter price gain 14.9%.
FactSet Earnings Insight, as summarized in secondary reviews of the completed second-quarter season, including LongYield, September 27, 2026. Blended earnings growth about 52%; about 33.8% excluding Alphabet and Amazon; 86% earnings beat rate; revenue growth about 15%; net margin 17.0%. Company names are used only to explain index-level math.
FactSet Earnings Insight, September 18, 2026, John Butters. Q3 2026 estimated earnings growth 28.9%, versus 26.7% on June 30; revenue growth 11.9%; next-twelve-month earnings estimates up 8.8% from June 30 to September 18.
FactSet Insight, “S&P 500 Earnings Season Preview: Q3 2026,” John Butters, October 2, 2026. Q3 earnings growth estimate 29.5%; Q3 revenue growth estimate 12.3%; June 30 earnings estimate 26.7%; positive EPS guidance 62% (72 of 116 companies); Q4 earnings growth estimate 27.6%; calendar-year 2026 earnings growth estimate 32.4%.
Zacks, via FXStreet, “Q3 earnings on track for 8th consecutive quarter of double-digit growth,” October 1, 2026. Q3 earnings estimate +24.1%; revenue +11.6%.
Reuters, “Investors wary of slowdown in US corporate profit boom,” October 1, 2026, citing LSEG I/B/E/S. Full-year 2026 S&P 500 earnings expected to rise more than 35%; 2027 expected growth about 15%. Different methodology from FactSet, which is why both figures are shown.
U.S. Bureau of Labor Statistics, Consumer Price Index — August 2026, released September 11, 2026. Headline +0.4% month over month and +3.4% year over year; core +0.3% and +2.4%.
Federal Reserve Bank of St. Louis, FRED, as of September 30, 2026. PCE price index +3.4% year over year in August 2026; real GDP +2.2% annualized in the second quarter of 2026; unemployment 4.1% in August.
Board of Governors of the Federal Reserve System, FOMC statement and Summary of Economic Projections, September 16, 2026. Target range raised to 3.75%–4.00% on a 12–0 vote. Median funds rate 4.1% for year-end 2026 and 2027. Median 2026 PCE inflation 3.7%. Two-percent inflation in the 2029 median.
Federal Reserve H.15 Selected Interest Rates, September 30, 2026 release, covering September 29. Federal funds effective rate 3.88%. Two-year Treasury 4.89%. Ten-year 5.26%. Thirty-year 5.59%. New York Fed data hub confirms the 3.88% effective rate and the 3.75%–4.00% target range.
U.S. Bureau of Labor Statistics, The Employment Situation — August 2026, September 4, 2026. Payrolls +162,000; unemployment rate 4.1%; average hourly earnings +3.1% year over year; labor-force participation 61.6%. U-6 of 7.7% from FRED.
CountryEconomy.com, U.S. 10-year yield, September 30, 2026 close 5.24%. Used only as the September 30 market compilation alongside the H.15 September 29 print.
NerdWallet, September 16, 2026, 30-year fixed mortgage APR near 7.02% on Zillow-provided quotes. Mortgage News Daily, cited by CNBC the same week, reported 7.19%.
U.S. Energy Information Administration spot prices, release dated September 30, 2026. WTI Cushing $96.16 on September 29; Europe Brent spot $113.96 on September 29. FRED series DCOILWTICO confirms the WTI print.
Investing.com, ICE Brent futures, September 30, 2026 settle $96.50. Mid-September settlements were above $100.
Kalshi and Polymarket prices as compiled by Sikt Intelligence and DeFi Rate, October 1 and September 30, 2026. Democratic House near 92%; Republican House near 8%–9%; Democratic Senate near 62%; Republican Senate near 38%. Seat ranges from Scrutinel, October 1, 2026: expected House near 233 Democratic seats; expected Senate near 51 Democratic seats. Supermajority thresholds used here are 290 House seats and 67 Senate seats. These are market prices and model outputs, not a Rigden Capital Strategies forecast.

Disclosures

Rigden Capital Strategies is a registered investment advisor. Investing involves risk, including possible loss of principal.

Every investment involves some level of risk, and there is no guarantee that any strategy or recommendation proposed or implemented by a representative of Rigden Capital Strategies will be profitable or meet its stated objectives. Past performance is not a reliable indicator of future results. This commentary is general background on market conditions and on how the Investment Committee is currently implementing written objectives. It is not personalized investment, tax, accounting, legal, or insurance advice, and it is not an offer to sell or a solicitation to buy any security.

Advisory services are fee-only. Rigden Capital Strategies does not sell commissioned advisory products. Some supervised persons maintain outside business activities, including insurance, through separately licensed agencies. Those activities are outside the advisory relationship. The firm does not receive commissions, referral fees, or other third-party compensation for advisory services. Any insurance placement is handled by a separately licensed person, and compensation for that placement, if any, is disclosed on that person’s Form ADV Part 2B and is not a fee of the advisory account.

This Quarterly Update is educational commentary prepared by the Investment Committee of Rigden Enterprises LLC d/b/a Rigden Capital Strategies (SEC File 801-132101; CRD 326930). It is not a research report, not a rating, and not a recommendation of any security, sector, region, or asset class. Index performance shown is price return unless noted and does not include dividends, fees, or taxes. You cannot invest directly in an index. Index results are not the results of any account managed by Rigden Capital Strategies.

The statement that markets may be higher over the next twelve months is an opinion of the Investment Committee. It is not a price target, not a promise, and not a projection of any client account. Actual results will differ. The dividend tilt described for more balanced and conservative accounts is a description of current portfolio construction inside existing written objectives. It may not be suitable for every investor. Dividend-paying stocks can lag, can cut dividends, and can decline when interest rates rise. This communication does not present the performance of that tilt.

Discussion of the November 3, 2026 election is not an endorsement of any candidate or party. Prediction-market prices and seat models are third-party sources and can change. Numbered sources are third-party materials. Rigden Capital Strategies has not independently audited every underlying data point and does not guarantee completeness.

Under Advisers Act Rule 206(4)-1 (the Marketing Rule), this communication does not present hypothetical performance, extracted performance, predecessor performance, or related performance. It does not include testimonials or endorsements. It does not compare Rigden Capital Strategies composite results with any benchmark. It does not include a specific investment recommendation.

Content is current only as of October 2, 2026, using quarter-end market closes and the latest official releases then available. It will not be updated except by a later posted note. Readers should consult their advisor and their signed agreements before making any financial decision.