3 reasons for investors to be cheerful till year-end

Everywhere I look, the mood among investors feels heavier than the numbers actually justify. There is talk of central bank brinkmanship, and a market supposedly one bad news day away from falling apart, among a myriad of other downbeat projections.

There are real headwinds out there, and I’m not pretending otherwise. But underneath the noise, three genuinely powerful forces are lining up in investors’ favour between now and the end of the year, and I think sentiment has swung further than the fundamentals justify.

The first is that corporate earnings are finally broadening out, and the numbers back this up in a big way.

One of Wall Street’s most closely watched earnings models is now projecting profit growth of around 12% across America’s largest companies this year.

Analysts increasingly describe 2026 as a broad-based marathon rather than a sprint led by a handful of tech giants.

Industrial firms, financial institutions and consumer-facing businesses are starting to take the baton from the small group of mega-cap technology names that carried the market almost single-handedly for the past two years. A rally standing on dozens of legs is infinitely sturdier than one standing on seven.

There’s also another piece of this earnings story worth watching. The AI spending boom is shifting away from the infrastructure build-out that dominated the last two years and toward actual productivity gains showing up in company results.

This turns a story about capital expenditure and hype into one about earnings and cash flow, a far more durable foundation for a rally.

The second reason is one most American investors barely think about, but every global investor should be watching closely.

The dollar is weakening, and it has potentially, in my view, much further to fall. The greenback dropped around 10% at one point last year after a decade of dominance, and even after that slide, it remains roughly 29% above its long-term fair value on a real basis.

This gap matters enormously. A weaker dollar has already helped non-US stock markets outperform American ones by close to 14 percentage points in dollar terms over the past year, and several major forecasters now expect the dollar’s decline to continue, possibly deepening into a multi-year downtrend.

For investors already diversified internationally, across Latin America, Asia and emerging markets more broadly, it could be rocket fuel. One emerging region alone posted returns above 37% over the past year.

A return like that is impossible to ignore, and it should be forcing a hard conversation in every portfolio still built as though the dollar can only go one way.

The third reason is one of the most reliable patterns in market history, and it tends to repeat itself with striking consistency.

The final quarter of the year is historically the strongest quarter for stocks.

Since 1928, equities have averaged a gain of 2.1% across all quarters, while the fourth quarter alone averages 2.9%, comfortably ahead of the rest.

When markets have entered the final quarter already higher for the year, a common scenario in recent decades, the average fourth-quarter return jumps to 4.4%, and stocks have finished higher in that scenario 83.1% of the time.

Seasonality alone should never be a strategy, but ignoring a pattern this consistent would, perhaps, be its own kind of mistake.

None of this means throwing caution to the wind. Currency volatility around Japan, political uncertainty in several major economies, and stretched valuations in pockets of the US market are real risks worth watching. Earnings can disappoint and seasonal patterns can break.

But the balance of evidence points toward opportunity rather than danger, and investors who let anxiety override the data risk missing a genuinely strong stretch for global markets.

For those sitting on cash and watching from the sidelines, the calculation is shifting. The risk of missing one of the historically strongest stretches of the calendar is starting to look larger than the risk of being invested through it.

Global investors have spent much of this year bracing for the next shock. Earnings are broadening, the dollar is weakening in ways that favour international portfolios, and the calendar itself is tilted in stocks’ favour.

It might be time to start bracing for the opposite outcome: a genuinely strong finish to the year.

The headwinds have not vanished, and they never fully do, but for the first time in a while, the tailwinds perhaps look like the stronger force.