Three reasons why this Wall Street market-making powerhouse says investors should reload on stocks now

September provided a reset for stocks, pointing to a good end to the year, says Scott Rubner The fourth quarter of the year is shaping up to be good for Wall Street Recent weeks may have been frustrating for investors, with the S&P 500 churning beneath its surface to produce a gain of just 2% in the third quarter. But Scott Rubner, head of equity and equity-derivatives strategy at Citadel Securities, thinks September in particular gave the market a reset that it needed, as investors' equity exposure and leverage dipped, retail activity cooled, algorithm-focused funds sold and valuations were compressed. Citadel Securities says it executes approximately 35% of all U.S.-listed retail volume, making it the largest by market share. "Now the setup begins to change," he says, in a note published Thursday. "September was the reset. Q4 is the reload." The first reason for Rubner's optimism is that corporate earnings are about to dominate market chatter for several weeks - and they're expected to be very strong, on an aggregate basis, once again. S&P 500 SPX third-quarter earnings per share (EPS) estimates have increased 2.2% over the past two months, versus a median 1.9% decline over the same pre-earnings window since 2000, according to Rubner. And this leaves consensus Q3 EPS growth of 27% compared to the year before. That follows 20% EPS growth in Q1 and 32% in Q2, both of which came in significantly higher than expected at the time. "The story in 2026 has not been a low bar. Expectations have moved higher, and companies have continued to clear them by a wide margin," Rubner says. Crucially, with the broader market spinning its wheels of late, surging earnings mean valuations have dropped. The S&P 500 trades at 19 times its forward earnings, which is 15% below its 2026 high and essentially in line with its 10-year average, according to Rubner. As the chart below shows, the pullback in technology valuations is even greater. Source: Citadel Securities The earnings season should mean that the environment shifts back to a stock pickers' market, Rubner adds. "Oil, rates, and geopolitics dominated the conversation in September. Earnings and company-specific fundamentals are about to take back the calendar." Indeed, it's the calendar that should provide another reason for investors to be more bullish as the "seasonal backdrop is turning from a headwind into a tailwind," he says. The stats show that since 1930, the S&P 500 has gained an average of 5.6% in Q4 during midterm years, nearly twice the 2.9% average across all years. But it won't necessarily be a straight line higher, with the Q4 low having been touched in October in 14 of the 23 midterm years since 1930. From such lows, the median rally into year-end has been 10%, Rubner observes. "That is an important distinction," he says. "A constructive Q4 setup does not necessarily mean a clean start to October. Historically, October has often provided the volatility and the entry point before the stronger part of the year-end move." Rubner considers the final bullish driver to be currently the most important: buyers should come back. "Several of the market's largest marginal buyers pulled back through September. They now enter Q4 with considerably more room to add," he says. For example, corporations are mostly in their earnings blackout periods, but the stock buyback period begins to reopen on Oct. 15. "From there, the corporate bid should build through earnings season and accelerate into November, historically the strongest month of the year for corporate buyback executions," says Rubner. Retail investors are also poised to increase their buying of stocks and options after pulling in their horns during September, he contends. Retail investors' "cash activity has increased from September to October in each of the last four years, by an average of about 8%, while options activity has risen in each of the last three, by an average of about 15%," Rubner adds. Finally, traders that Rubner describes as systematic (typically funds that undertake computerized, algorithmic trading based on quantitative models) have reduced their stock-market exposure notably. Their positioning is now in the bottom fifth of its range since 2024 and below neutral for the first time since April. Rubner concludes: "September took leverage and positioning out. Q4 brings earnings, catalysts, and buyers back in." And if there are any market dips in the final quarter "we would use that weakness to add to core longs, with a preference for single names where positioning has reset and earnings can drive the next move." The markets U.S. stock-index futures (ES00) (YM00) (NQ00) are higher as Treasury yields BX:TMUBMUSD10Y slide. The dollar index DXY is lower as gold futures (GC00) trade around $4,215 an ounce. Key asset performance Last 5d 1m YTD 1y S&P 500 7666.45 -0.49% -1.05% 11.99% 14.16% Nasdaq Composite 26,871.60 -0.25% 1.08% 15.62% 17.63% 10-year Treasury 5.233 6.80 44.40 106.10 111.20 Gold 4216.4 -2.17% -6.72% -2.67% 8.65% Oil 89.18 -5.89% -2.72% 55.34% 46.97% Data: MarketWatch. Treasury yields change expressed in basis points Take control of your news. Make MarketWatch your preferred source on Google. The buzz The U.S. nonfarm payroll report for September will be released at 8:30 a.m. Eastern. Economists expect 84,000 jobs were added, down from 162,000 in August. The unemployment rate is forecast to stay at 4.1%. Nike shares (NKE) are sliding to a 13-year low after earnings beat estimates, but CEO Elliott Hill said it would "take time" for turnaround efforts to pay off. Amazon (AMZN) is seeking to offload about $8 billion of advanced Nvidia (NVDA) chips to external investors through a new vehicle aimed at strengthening its balance sheet, according to the Financial Times. Amazon is also hiking chip-rental prices. Oil prices (CL.1) fell following reports Europe was considering releasing some diesel stocks. Dallas Fed President Lorie Logan will give opening remarks at the Workshop on the Macroeconomic Implications of Migration at 10 a.m. Other U.S. economic data released on Friday include factory orders for August, published at 10.am. Quant hedge funds reap big gains from global bond selloff. The chart Following on from the buyback bonanza noted above by Scott Rubner at Citadel, here's the breakdown of where this year's $1.3 trillion of purchases may be going. Top tickers Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern. Ticker Security name INFY Infosys NVDA Nvidia MU Micron Technology GME GameStop TSLA Tesla AMZN Amazon.com NKE Nike SPCX SpaceX AMD Advanced Micro Devices TSM Taiwan Semiconductor Manufacturing -Jamie Chisholm This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 10-02-26 0648ET Copyright (c) 2026 Dow Jones & Company, Inc.

Three reasons why this Wall Street market-making powerhouse says investors should reload on stocks now

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