To hear FactSet tell the story, the third-quarter earnings season, which starts this week, will be impressive.
FactSet (FDS), the big business data provider, is expecting corporate earnings to grow as much as 35% from a year ago. That’s up from overall Wall Street expectations of earnings growth around 25%.
If the earnings come close to either number, that might unleash a lot of buying from bulls.
But, first, investors will be judging everything against two giant external forces:
- The ongoing political turmoil unleashed by the U.S.-Israel war against Iran and the continuing ugly war between Ukraine and Russia.
- The U.S. midterm elections, which come in about three weeks on Nov. 3.
The backdrop: oil prices rule all
Increasingly, all these pieces of noise, for lack of a better term, are merging together into a kind of sonic boom that isn’t letting up.
Global energy prices have soared because of the Middle East turmoil that now includes war between Saudi Arabia and Houthi rebels based in Yemen. On Saturday, an attack on Saudi Arabia’s King Khalid International Airport killed at least 12 people and injured 300 to 399 more.
U.S. diesel and gasoline prices this year were at $6.28 a gallon and $4.36 a gallon as of Oct. 11, up 76% and 54%, respectively.
President Trump was talking about Russia adding 300,000 tons of diesel onto the global market, with more coming later on.
That assumes the supply is available. Ukraine attacks on Russian refineries have cut refinery runs as much as 27%, with diesel production down 20% to 30%.
Russia and Trump want Ukraine to stop its attacks. (Trump also called for Ukraine to replace president Volodymyr Zelenskyy.)
But Ukraine won’t stop unless Russia stops attacking its energy infrastructure. So far, there’s been no agreement.
And, of course, the U.S. midterms are coming, and President Trump is desperately trying to stave off major losses for the Republicans.
Earnings season begins with banks and their outlooks
That brings us to the earnings this week. These will predominantly come from financial institutions, including:
- Oct. 13 (Tuesday): JPMorgan Chase (JPM), Goldman Sachs (GS), UnitedHealth Group (UNH) and Wells Fargo (WFC).
- Oct. 14 (Wednesday): Bank of America (BAC), Morgan Stanley (MS) and BlackRock (BLK).
- Oct. 15 (Thursday): Charles Schwab (SCHW), Bank of New York Mellon (BNY) and US Bancorp (USB)
Financial stocks generally have struggled in 2026. The financial sector of the Standard & Poor’s 500 Index is basically flat on the year, according to Barchart.com data, while energy stocks are the leading sector, up 45%, followed by technology stocks, up 29.9%. The index is up 14.1%.
There are some nonfinancial giants reporting results, including Johnson & Johnson (JNJ) (Tuesday) and chip-equipment maker ASML (ASML) (Tuesday).
But the big non-financial report will be Taiwan Semiconductor (TSMC) on Thursday. Taiwan Semi fabricates chips for Nvidia and others.
Delta Air Lines (DAL) earnings report on Oct. 9 suggested demand is strong, despite higher fuel costs and surcharges on ticket prices. (Delta is focusing on business and affluent travel customers.)
As Monday, Oct. 12, is Columbus Day / Indigenous Peoples Day, U.S. bond markets will be closed. U.S. stock trading will operate as usual.
More Economy:
- Goldman Sachs rethinks U.S. economy as interest rates stay higher
- Heating bills expected to jump by $1,000 in some U.S. states this winter
- How stocks will react when the catalysts are few
Pay more attention to economic and political outlooks
The thing to listen to is less the results but more the outlooks. The odds are the banks will cite a solid economy but note rising interest rates and stubborn inflation pressures. They may offer their views on the upcoming elections — but as vaguely as they can.
My guess is they will be more forthcoming on the economy and interest rates.
The 10-year Treasury yield was at 5.24% on Oct. 9, slightly off from its 2026 peak of 5.37% on Oct. 7. These were the highest levels on the primary determinant of mortgage rates since March 2002. Mortgage News Daily pegged the rate on a 30-year mortgage at about 7.5% on Oct. 9.
Mortgage rates are coming in around 7.5%.
Three economic reports to watch
Meanwhile, the Labor Department will issue two reports on inflation during the week:
- The Consumer Price Index report, due Wednesday (Oct 14).
- The Producer Price Index report on Thursday (Oct. 15).
Also, the National Association of Realtors will publish its report on September existing home sales on Oct. 13. Zillow is expecting the report to show softening sales as mortgage rates are mostly parked around 7.5%.
The S&P 500 rose 1.2% on the week. The Dow Jones Industrial Average closed up 0.9%, and the Nasdaq Composite Index rose 0.6%.
Related: Fed’s Waller pivots on interest-rate bet as worried consumers sound inflation alarms
