The Weekly Update 09/18/2026™
Created by Brad Cooke, CFP® (Jim’s Business Partner and Son-in-Law)
Three big forces tend to move stock markets more than almost anything else: politics, economics, and investor sentiment. Here’s where I believe each stand right now.
September Slog?
September’s reputation as the worst performing month for investors is earned...and incomplete. Over long stretches of market history, September is the only calendar month with a negative average return for the S&P 500 (roughly −0.6% to −1.2% depending on the start date). As Paul Harvey would say "And now the rest of the story" because that average is pulled down by a handful of ugly years, not by September being down every time. About half of Septembers still finish positive, and the typical median September is closer to flat. Without further ado, please see my thoughts below for this month.
1. Politics
The next checkpoint is November 3, 2026 midterms when the entire House and about one-third of the Senate are on the ballot. Policy changes, taxes, spending, regulation, and who confirms judges and Fed nominees. That uncertainty tends to rise into elections even when the underlying economy is fine. That being said, history is blunt on one item in particular for our discussion. The party that holds the White House usually loses House seats. Since World War II that average is on the order of two dozen seats; Senate losses are smaller and less reliable (a few seats on average). Gains for the president’s party in a midterm are rare. Markets care less about which party “wins” than about whether gridlock or a clear majority changes the odds of big legislation. Big picture? Gridlock is great for markets.
2. Economics
Markets ultimately follow cash flows, how fast the economy is growing, how tight the job market is, what companies earn, and what it costs to borrow. Right now, the picture is what I'd call "passable". Growth has cooled to a modest pace with recent quarters around 1.5–2%, unemployment is still low near 4.1%, and hiring recently picked up again. Inflation has come down from its peak but is still above the Fed’s 2% target, which is why policy rates sit in the mid-3% range and investors are watching whether the Fed holds or tightens. The main takeaway is that expectations are still for the Fed to keep rates steady until the end of 2026, with an outside possibility of a small hike. Could there be a surprise drop? Sure. Is that likely? I'm sticking with probably not.
3. Investor Sentiment
If you are waiting for the everyday crowd to give you a clean “risk on” or “risk off” answer, you will be waiting a while. People are a little jumpy about rates and the midterms, but they have not headed for the exits. The Fear & Greed gauge we utilize in our monthly "7 Signs of a Changing Economy" is leaning toward fear this week, which sounds dramatic until you remember it is just a snapshot of recent trading and it can flip after something like a jobs report released by the BLS. You still have a market that is up for the year. We haven't seen panic in day-to-day trading, and there remains plenty of investors who do not want to miss whatever comes after the election. We see the mood as mixed at this point.
In summary, Fall weakness and pre-election noise are uncomfortable. They are also when people are most tempted to sell a long-term plan to feel safer for a few weeks. That type of trade normally doesn't work out so well. Midterm years are often among the weaker years of the four-year presidential cycle before the vote. After the vote, the pattern flips: the S&P 500 has typically delivered strong 12-month returns, often in the low-to-mid teens on average in modern samples, as policy uncertainty fades and attention returns to earnings and the economy. Missing those recoveries is how investors turn a temporary dip into a permanent shortfall. The job is not to outguess September, October, or one election night. It is to own a diversified portfolio through the noise so you are still invested when the rebound that has so often followed midterms shows up.
Thank you for your trust and confidence. As always, I am interested in your thoughts, comments, and observations. Feel welcome to call, email or stop by the office and say Hi.
Respectfully,
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
The Wealth Strategies Group
7761 Shaffer Parkway, Suite 100
Littleton, CO 80127
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*The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and there is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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