LIVE MARKETS-Earnings, not elections, drive markets

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EARNINGS, NOT ELECTIONS, DRIVE MARKETS

Last week's midterm elections injected fresh volatility into the market as investors assessed the results and their implications. The Cboe Volatility Index .VIX climbed to its highest level since late March.

For Brian Belski, chief executive and chief investment officer at Humilis Investment Strategies, the recent market turbulence is no surprise.

Earlier this year, Belski argued that "volatility is the price of admission" for investors, and in his latest "Brief" published Monday he reiterated that view. Humilis entered 2026 expecting an earnings-driven market to produce bigger swings in prices.

Even so, politics remains a frequent topic in Belski's conversations with clients. While government policy can affect businesses and markets, he cautions against allowing election results or political preferences to drive investment decisions. Investors who react emotionally to political headlines, he argues, risk losing sight of the underlying fundamentals.

Volatility may remain elevated as markets continue to digest the election results and questions surrounding data center spending. Yet Belski sees little evidence that the broader earnings story has deteriorated.

The fundamental backdrop, he argues, remains supportive. Blended third-quarter earnings growth for the S&P 500 is running at 31.4%, while full-year 2026 earnings growth is projected at 33.3%. At the same time, valuations have become less demanding. The index's forward 12-month price-to-earnings ratio has fallen to 17.7, below both its five-year average of 19.8 and its 10-year average of 19.1.

Belski acknowledges that earnings growth is unlikely to maintain its current pace indefinitely. However, slower growth is not the same as shrinking profits. His message remains unchanged: focus on fundamentals, not politics, and view periods of heightened volatility as opportunities rather than reasons to abandon long-term plans.

(Terence Gabriel)

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