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5 Reasons the S&P 500 Could Keep Rallying Through Year-End

Written by Thomas Hughes

The S&P 500 is set up for a great year, and there are still gains to come. Seasonally, Q4 is the strongest of the year, typically rising 80% of the time, and there are other factors in play suggesting this year will follow suit. To begin, the onset of Q4 marks the end of the typically volatile summer trading season. Smart-money investors who “sold in May and went away” are coming back and ready to get back into the market. While September is usually weak, rising only about 50% of the time, October usually marks a bottom, rising about 60% of the time, with November and December to do the heavy lifting. In the best years, the Santa Claus Rally caps the seasonal rally and keeps the market rising into the New Year.

Wicked Hot Earnings Growth Underpins This Rally

Earnings drive any market, and they are growing at a robust pace in 2026, with strength expected to continue through the year’s end. Coincidentally, JPMorgan Chase (NYSE: JPM) kicks off the Q3 reporting season in mid-October, coinciding with the seasonal bottom indicated by the data. As it stands, the Q2 results reflect a massive disconnection between the market and reality: fears are valid, but the facts are clear—the S&P 500 has hurdles, but profitability is on the rise.

S&P 500 earnings growth topped 50% in Q2, outperforming the consensus estimate by nearly 3000 basis points, and there is no reason to think growth is going to slow in the current quarter. The more likely scenario is that the S&P outperforms the mid-August consensus of about 27.5% by a wide margin and provides solid Q4 guidance.

Energy is driving the outperformance. High oil prices are boosting earnings, with some reporting about 150% year-over-year growth, such as Exxon Mobil (NYSE: XOM). The caveat is that this is not an isolated event. Energy prices are still high, good for energy stocks, but the core driver is the AI boom, which is still accelerating. NVIDIA (NASDAQ: NVDA), as the leader, posted 140% year-over-year non-GAAP earnings-per-share growth in its latest reported quarter, while revenue rose 85%; the earnings tailwind remains strong.

The FOMC Is Unlikely to Hike Rates

As scary as high energy prices and inflation are, the FOMC is unlikely to hike interest rates this year. Oil prices are a key driver of inflation, and the FOMC has little control over them. The best they can do is impair business activity with higher interest rates, hoping to curb oil demand, but they are unlikely to do that, given the economic data. The economy isn’t in danger, but the latest reads should give the committee pause.

Labor markets, the Fed’s other mandate, are still expanding, but tepidly, and could easily tip into contraction. Retail sales figures are more alarming, having contracted unexpectedly in the June/July period. The more likely scenario is that the FOMC stands pat, adopting a wait-and-see posture, which is enough—stability is as good as a rate cut if it allows businesses and enterprises to advance their strategies as planned.

The AI Boom: It’s About to Boom Again

The AI Boom is the core driver of this market, led by NVIDIA and supported by an expanding ecosystem of tech companies. Within this, two fall catalysts stand out, starting with NVIDIA’s summer activity. The company not only cemented its pipeline but also derisked the outlook by securitizing its GPUs. The company removed risk from its own balance sheet while providing liquidity for its consumers—a brilliant move if ever there was one. More importantly, the earnings boost for many of the AI companies is back-ended. Last year’s spending, which was a hurdle, equates to next year’s revenue and earnings gains, which is a catalyst.

The second catalyst is Advanced Micro Devices (NASDAQ: AMD). It is launching initial deliveries of the MI450 line and Helios rack systems this quarter and will usher in the inference age, providing inference-focused GPU capacity at lower cost. This is critical, as the inference infrastructure market is expected to grow rapidly and eventually surpass demand for model training. AMD’s forward outlook does not reflect this opportunity. Expect it to outperform, amplify the S&P 500 NVIDIA effect, and drive a bullish sentiment cycle for its stock and the broader ecosystem.

Market Breadth Is OK; Catalysts for Improvements Are in Play

Market breadth is the final piece to this puzzle. The market breadth, as indicated by the Advanced/Decline Line and New Highs/New Lows index, is OK. It weakened somewhat over the summer but did not revert to indicate market distribution. As it stands, the indicators are trending higher, showing relative strength, with a bullish bias and catalysts at hand. The likely outcome is that breadth improves as the summer season rolls into early fall, adding lift to the indices broadly. Indices, as of late August, such as the S&P 500, Dow Jones Industrial Average, NASDAQ Composite, and Russell 2000, reflect uptrends and generally bullish conditions despite the summer swoon.

 READ THIS STORY ONLINE

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Walmart’s Post-Earnings Drop Could Be a Buying Opportunity

Written by Thomas Hughes

Walmart’s (NYSE: WMT) near-term hurdle is weaker-than-expected Q2 sales in North America. The issue, foreshadowed by weak July retail sales, led to a 5% price drop, taking the stock to near its 52-week low.

That is the opportunity: the 52-week low and potential for long-term gains. While the near-term hurdle exists, it is offset by sustained growth and improved profitability, which is the critical factor. Walmart is a big business; more than moderate growth is unlikely given its size and scale, and its cash flow is the key. Cash flow enables healthy capital returns, which drive the stock price higher over time.

Walmart’s capital return is incredibly reliable, backed up by healthy insider ownership centered on the founding family. They run Walmart in their own interests: to produce healthy cash flow and pay themselves to own it. 

As it stands, Walmart is a Dividend King with more than 50 years of consecutive annual increases on its record, a signal that it can withstand economic changes and sustain its capital return over time.

The yield isn’t impressive at under 1%, even with the Q3 price pullback, but it is as safe as they come, amounting to less than 35% of the current-year earnings forecast and compounded by share buybacks. Walmart’s share buybacks drive most returns, accounting for 56% of Q2 activity. They reduce the share count incrementally each quarter, providing shareholders with leverage as the company grows and builds equity.

Walmart Outperforms in Q2, Raises Guidance

Walmart’s near-term headwind isn’t as big a problem as it may seem, given its Q2 strengths. The company’s push into international markets and its advertising business helped offset domestic weakness, resulting in $187.94 billion in net sales, up nearly 6% year over year and $1.12 billion above expectations. Segmentally, U.S. comp sales increased 2.6% on traffic and tickets, International grew 12.8%, and Sam’s Club grew 8.8%.

Internally, ecommerce continues to drive sales, up approximately 23%, while the ad business is growing rapidly. It advanced by 38%, with 38% growth in the United States, and is expected to remain strong and drive margin long into the future. Membership is another strength, up 17% year over year (YOY), driven by gains in Sam’s Club and Walmart+. Walmart+ is a premium tier enabling enhanced shopping experiences, free delivery, shipping, and streaming services.

Margin was the better part of the Q2 report. While IEEPA tariff refunds affected the GAAP results, even the adjusted figures revealed improvement. The company widened gross and operating margins, driving a nearly 29% increase in operating income, 17.9% adjusted, and sufficient cash flow to sustain the capital return outlook.

Guidance is another hurdle, as it came in slightly below MarketBeat’s consensus for Q3 and full year results. However, the company improved its previous forecast, expecting mid-single-digit top-line growth and modestly accelerated earnings growth.

Walmart Analysts See 30% Upside Despite Near-Term Pressure

Walmart’s analysts are bullish on the stock, having issued numerous affirmations and price targets in the weeks leading up to the release. The trend includes steady coverage by 36 analysts, a firm Moderate Buy consensus rating with 86% Buy-side bias, and a $138.50 consensus price target.

The good news is that consensus forecasts about a 30% upside relative to the critical support target; the bad news is that July/August activity created a top in the price-target trend, which may turn into a retreat. In this environment, WMT’s stock price has upside but is unlikely to advance until analysts revert to a more optimistic posture. Looking ahead, WMT’s rebound may be sharp and sweet when it triggers, as the stock trades below the low-end analyst target as of mid-August.

Institutional Buying Could Put a Floor Under Walmart Stock

Meanwhile, institutional activitysuggests the downside risk is limited. The group owns 25% of the stock, a seemingly small amount, but it’s offset by high insider holdings above 50%.

MarketBeat data shows that institutional buyers outpaced sellers $3-to-$1 over the trailing 12 months, with buying activity spiking in early Q3. With this in play, the group will likely buy on price dips and may provide solid support near $105.

Early price action wasn’t favorable following the Q2 release, with the stock down more than 5% in premarket trading. The question is whether Walmart confirms support in the subsequent sessions or moves lower, presenting its buying signal sooner rather than later. READ THIS STORY ONLINE

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The Trade Desk’s Earnings Miss Raises a Bigger Question About Its AI Future

Written by Jessica Mitacek

Outside of millennials who came of age in the ’90s and investors who endured the dot-com bubble, not many people remember Netscape. Launched in 1994, the pioneering web browser predated Chrome, Firefox and Safari. At its peak, it dominated 90% of the browser market. Netscape lost most of its browser market share to Microsoft’s (NASDAQ: MSFT) Internet Explorer during the browser wars, and AOL ultimately discontinued Netscape browser development and support in 2008.

Today, company co-founder Marc Andreessen is perhaps more widely recognized for writing a Wall Street Journal op-ed titled “Why Software Is Eating the World.” His argument was that software was beginning to take over major industries around the globe, citing examples like Hewlett-Packard (NYSE: HPE) “jettisoning its struggling PC business in favor of investing more heavily in software,” and Google’s plans to buy Motorola Mobility.

But in 2017, Jensen Huang, CEO of NVIDIA (NASDAQ: NVDA), popularized the next iteration of that quote by stating that “AI is going to eat software.”

And after reporting Q2 earnings in early August, The Trade Desk (NASDAQ: TTD) may have just proven him right.

Adapt or Lose: Software Is Yielding to AI

For decades, the tech playbook entailed building software and charging monthly per seat subscriptions or self-service fee structures to license workflows behind complex dashboards. And for decades, it worked.

The post-dot-com market recovery was dominated by names including Microsoft, Oracle (NYSE: ORCL), and Intel (NASDAQ: INTC), whose respective market caps swelled as they dominated niches within the industry.

But AI’s evolution has disrupted that model, and now the paradigm has shifted. Companies that evolved—including Microsoft, Oracle, and Intel—continue to find success through cloud services and data center infrastructure. However, firms providing Software-as-a-Service(SaaS) and self-service demand-side platforms (DSPs), like The Trade Desk, are increasingly illustrating the kind of disruption Huang anticipated.

According to industry consultancy firm Grand View Research, the global AI market is forecast to grow to nearly $3.5 trillion by 2033, registering a compound annual growth rate of 30.6%. Meanwhile, legacy platforms with complex user interfaces risk becoming less valuable in a world dominated by AI applications and AI search.

The Shift to AI Search May Have Broken The Trade Desk

Companies continue to turn to AI for agentic applications, allowing autonomous tools to act on behalf of humans rather than software being a tool used by humans.

When agentic AI executes tasks in this manner, it can undermine traditional SaaS seat-based licensing by reducing the number of human users needed to perform a task.

That’s one problem software firms are facing. Another is AI-dominated search. The Trade Desk isn’t a SaaS company; it is an ad tech provider with a cloud-based DSP platform that helps advertising agencies and brands buy digital ad space. It boasts omnichannel reach, enabling campaigns to span connected TV, streaming audio, websites, and mobile devices.

But growth has slowed dramatically at the same time that a structural shift toward AI search—and away from parts of the open Internet—has created a new threat to its business model. Meanwhile, its stock has plummeted more than 75% over the past year.

The Trade Desk’s business model benefits from a healthy open Internet with a large supply of advertising impressions outside of the major walled gardens. But with users increasingly turning to AI overviews that combine data from multiple sources and provide quick answers, web-browsing behavior is shifting, while some publishers are seeing declining referral traffic from traditional search.

For The Trade Desk, that creates the risk of so-called impression scarcity—a decline in available web traffic and, subsequently, digital ad impressions across parts of the open Internet. At the same time, agentic media buying offered by big tech rivals could allow brands to automate more of the advertising-buying process within platforms like Alphabet (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN), potentially reducing the value of independent DSPs like The Trade Desk.

Q2 Results Show The Trade Desk’s Growth Problem

For months, The Trade Desk was being touted as an undervalued bounceback candidate. Proponents pointed to the company’s fundamentals remaining intact, and attributed its poor stock performance to being an unwarranted victim of the SaaSpocalypse.

But after it reported Q2 earnings on Aug. 6, shares of The Trade Desk hit a seven-year low. Revised guidance shocked the market, and ongoing pressures from walled-garden ecosystems—like Alphabet, Amazon, and Meta Platforms (NASDAQ: META)—resulted in Wall Street downgrades.

The Trade Desk announced earnings per share of 34 cents, which missed analyst expectations of 40 cents. Revenue, which rose just 3% year over year (YOY) to $715.06 million, below the consensus forecast of $752.41 million. Operating expenses rose 6% YOY (12% when excluding stock-based compensation), while net income fell to $64 million from a multi-year high of $187 million in Q4 2025, good for a nearly 66% decrease.

The stock carries a consensus Reduce rating, with 10 of the 39 analysts covering it assigning TTD a Sell. Current short interest of 18.10% and zero insider buys over the past 12 months indicate that there may be more tough times ahead for shareholders hoping for reversal. READ THIS STORY ONLINE

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