2026 Has Been Full of Uncertainty
So far in 2026, Wall Street equity investors have navigated an extremely complex landscape marked by macroeconomic forces, geopolitical pressures, and sector-specific concerns. Inflation has remained stubborn, hovering above the Federal Reserve’s long-term target. Disruptions in key transit areas like the Strait of Hormuz have led to an energy shock, with oil prices jumping 75% in 2026 alone. Recently appointed Fed Chair Kevin Warsh has been forced to tighten monetary policy. Artificial intelligence, the market’s fastest-growing area, has been faced with constant fear, uncertainty, and doubt about AI safety and CAPEX scrutiny. Meanwhile, the labor market is softening, and the upcoming midterm election adds another layer of legislative uncertainty.
The Power of Price Action Vs. News Analysis
In my more than two decades of investing experience, I have learned that the stock market is the master manipulator. Most amateur investors focus too much on news headlines. However, analyzing news headlines alone is a sure-fire way to misinterpret the stock market. Rather than viewing news headlines in a vacuum, investors should focus on the market’s price action in relation to the news.
For instance, if listed all the 2026 uncertainties to someone who does not follow the equity market, they would most likely guess that stocks are in a major correction. The fact is that the stock market has had the proverbial kitchen sink thrown at it, and the S&P 500 Index is just 2% off its all-time highs. Remember, stocks tend to climb the “Wall of Worry.”
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Retail Investor Sentiment is in the Gutter
The American Association of Individual Investors (AAII) survey is a widely followed weekly poll that measures the percentage of individual retail investors who feel bullish, bearish, or neutral about the stock market over the next six months. Although the major equity indexes are within a hair of their highs, investor sentiment is extraordinarily negative. In fact, the latest AAII Survey shows the fewest bulls and most bears in over a year.
As George Patton once said, “If everyone is thinking alike, then somebody isn’t thinking.” Historical data backs up this claim. Since the late 1980s, when AAII bulls have fallen below 29% with the S&P 500 Index within 10% of all-time highs, stocks have been higher 100% of the time one month later (9 instances)
AI Safety Concerns are Overblown
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Recently, AI stocks corrected after OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei sounded the alarm on AI safety concerns and called for regulation. Despite the fear-mongering from AI leaders, it’s critical that investors read into what these CEOs are actually doing – not what they are saying. David Sacks, former “AI Czar” for the Trump Administration, made an astute observation:
“Dario (Anthropic CEO) has written that we need to “pace the frontier,” and Sam Altman (OpenAI CEO) has agreed. People may be surprised by my response: go ahead. You guys are the frontier. By any reasonable metric – market share, revenue growth, model capability – the two of you have a duopoly on frontier intelligence.”
Despite the alarmism, the top two AI CEOs are not slowing down. Earlier this month, Anthropic inked a $13.7 billion compute agreement while OpenAI held early talks with investors about another private funding round. Later, NVIDIA (NVDA) CEO Jensen Huang, the most important voice in AI, said,
“The fact that this is going to be the end of humanity – it’s complete nonsense. The fact that this is going to destroy half of the American jobs is complete nonsense.”
Mid-term Election Seasonality Suggests Better Days are Ahead
According to historical market data, the months leading up to mid-term elections are the worst time to own stocks in the four-year election cycle. However, after a choppy and frustrating summer market for investors, the good news is that seasonality suggests stocks tend to bottom around now and rally strongly into year-end.
Image Source: Equity Clock
Thursday, stocks across a variety of sectors broke out including Advanced Micro Devices (AMD), Tempus AI (TEM), Moderna (MRNA), Super Micro Computer (SMCI), and Aya Gold & Silver Inc (AYA).
Bottom Line
While macroeconomic headwinds, geopolitical energy shocks, and relentless media fear-mongering might suggest a market correction is overdue, the resilience of stock price action tells a different story.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Moderna, Inc. (MRNA): Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report
Aya Gold & Silver Inc. (AYA): Free Stock Analysis Report
Tempus AI, Inc. (TEM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).