October 2026 KWP Newsletter

Historically, October has had somewhat of a reputation problem on Wall Street. The month is associated with two of the most infamous stock market crashes in history—1929 and 1987. Yet October has also marked the end of multiple bear markets, reminding investors that a month known for frightening headlines can also be a turning point. The lesson? History is full of surprises, and the calendar alone cannot tell us where markets are headed next. As we move deeper into the fourth quarter, investors are watching corporate earnings, inflation, and Federal Reserve policy for clues about what comes next. https://www.stocktradersalmanac.com/Alert/20150924_2.aspx

A Tug-of-War Between Growth and Inflation

Markets entered the fourth quarter balancing two competing forces: resilient economic activity and persistent inflation concerns. Investors have been weighing corporate earnings expectations against energy prices, Treasury yields, and uncertainty surrounding Federal Reserve policy. Although the broader market has shown resilience, leadership continues to vary across industries, highlighting the importance of looking beyond headline index performance.

Sector Spotlight and Earning Expectations

October marks the start of a new earnings season, as companies begin reporting their third-quarter results. Investors will be paying particular attention to the major AI players, including Alphabet, Amazon, and Microsoft, which are expected to provide updates later this month. Their results—and, just as importantly, their outlook for future growth and AI spending—could offer valuable clues about corporate health, the sustainability of the AI investment boom, and the market's direction heading into year-end. https://www.foxbusiness.com/markets/october-could-be-a-huge-month-for-the-stock-market-heres-why

Company results and management guidance will help determine whether stronger earnings expectations translate into actual business performance. In addition, corporate earnings expectations often reveal important differences beneath the market's surface.

• Energy: Energy is emerging as a clear standout sector this earnings season. According to FactSet's October 12 analysis, analysts project third-quarter earnings growth of 121.1% for the S&P 500 Energy sector, the highest of all 11 sectors. Rising oil prices helped drive that outlook, with West Texas Intermediate crude climbing approximately 30% during the third quarter. Refining companies are also benefiting from strong refined-product pricing. While these projections are encouraging, energy earnings remain sensitive to commodity prices and can fluctuate significantly as market conditions change. *These figures are analyst estimates, not final reported results. 
• Technology and AI: Information Technology earnings estimates increased 3.5% during the third quarter. Investors continue to evaluate whether substantial AI investment will translate into sustainable profits, while competition and elevated valuations remain potential sources of volatility. *These figures are analyst estimates, not final reported results.
• Materials and Consumer Staples: Earnings estimates weakened during the third quarter, falling 10.2% for Materials and 4.0% for Consumer Staples. These revisions demonstrate why broad market performance can mask meaningful differences in the underlying health of individual industries. *These figures are analyst estimates, not final reported results.

https://insight.factset.com/sp-500-utilities-sector-earnings-preview-q3-2026

What Investors Should Watch Next

Inflation and Federal Reserve policy

The September Consumer Price Index was released October 14, followed by the Producer Price Index on October 15. These reports should help investors assess whether higher energy costs are feeding into broader inflation. The Federal Reserve's October 27–28 meeting will be another key event as policymakers evaluate inflation and labor-market conditions. Energy-price pressures and elevated bond yields could challenge stock valuations, particularly in interest-rate-sensitive industries. Conversely, easing inflation and continued earnings strength can provide potential support. https://www.bls.gov/schedule/news_release/cpi.htm

The Takeaway

Markets do not move on earnings, inflation, or interest rates alone; they respond to the changing balance among all three. Strong earnings expectations are encouraging, but energy-price pressures and uncertainty about Federal Reserve policy remain important risks. Rather than reacting to every headline, investors can benefit from maintaining a diversified portfolio, reviewing risk exposure, and keeping long-term financial objectives at the center of their decisions.

 Kotys Wealth Professionals

Investment Advisory services offered through TKG Advisors LLC, a Registered Investment Advisor.