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Seasonality and AI Set Stocks Up for a Strong Finish

October 28, 2026

Video Transcript

JD Durkin: Phil Rosen, chief market strategist at Silvia. I just saw you wave. You’ve got fans up here?

Phil Rosen: No, I just saw a friend over there. Dan, I have someone over here. Hanging.

JD Durkin: Okay. We’re going to talk seasonality in just a bit. I do want your take on Fed Day. I might be wrong, but I thought I saw you post something earlier this week that said we’ve had six FOMC decisions so far this year, and on all of them, or most of them, the S&P had finished in the red. Correct me if I’m wrong. And what do you make of what we have today?

Phil Rosen: I believe that’s right. Look, everyone kind of knew we were not going to get a move today from the Fed. Everyone’s looking at December. I think we’ve got an 82% chance of a hike going into the new year. For me, I’ve been saying this all year. I’ve been telling you this. We’ve had plenty of conversations about how the macro story is still AI. Even though that’s the main driver of the fundamentals in equity markets, the main driver of earnings right now, it is also the main macro driver, in my view.

I don’t think 25 basis points in either direction, or even a pause, is really going to change the macro backdrop or the equity story or valuations. To me, it’s like you’re looking at a Fed that’s an outdated institution anyway. They’re not going to be able to come in and really change how people think about the AI story, or even the cost of capital at this point, because a lot of the biggest spenders have so much capital at their disposal, and they’re tapping debt markets now. To me, it’s a bit of a wash.

JD Durkin: All right, let’s talk seasonality. October has a spooky, see what I did there, reputation here for the markets. We know what history tells us. How are you thinking about how we performed in September, given how choppy September can be, setting up for Q4 and what we’ve had so far this quarter?

Phil Rosen: Look, October probably was, correctly so, a mixed month, right? I think October has seen the worst crashes, like 1929, 1987, 2008. All these crashes happened in October throughout history. So people look at this month, and it’s almost like they’re bracing for impact. But really, October is up about 1% on average, dating back to 1950. And this really sets us up for a nice Q4. And not talking about midterms here, but Q4 is always the strongest quarter of the year, and I believe November is one of the strongest months of the year as well.

So, all things told, ‘27 is coming up right around the corner, and I think we’re going to go into it with a lot of strength. I know October was a little mixed, but the AI story is still there. The seasonality is still there. And that, of course, brings us to midterms, which is the biggest bull tailwind in history. And I think we’re set up very nicely here next year. On average, the post-midterm year has a 17% annual return, which is almost double a non-midterm election year. I think things are looking pretty good right now.

JD Durkin: Yeah. And today, October 28th, if I’m not mistaken, is also our good friend Ryan Detrick’s birthday. Shout-out, Ryan. Ryan Detrick of the Carson Group. He says, going back to 1950, this is one of, if not the, strongest days of the year for the S&P 500, at least since 1950. That checks out. It would be on Ryan’s birthday. Not for the whole month of October, but just specifically for October 28th.

Okay, this is not a politics show, but we do have really big midterm elections. The markets are pricing in what seems to be the general expectation: Democrats win the House, and the Senate is much more of a jump ball. Obviously, President Trump is still in his term for another two years. How are you thinking about how things could play out, and what components of this election should investors be more closely paying attention to?

Phil Rosen: So if you look at the historical breakdown between who takes the House, who takes the Senate, and who’s sitting in the presidential office, it really doesn’t matter who’s in power. And that sounds like a cop-out, I get it. But the data do suggest that, whoever is in power politically, investors fare very, very well in a post-midterm year. And also, I think the midterm fourth quarter is up 6% on average, versus the typical fourth quarter in the other three years of the presidential cycle, only about 2% or 3%. So we’re going to see, hopefully, a really strong Q4 after the midterms, even if it’s not someone’s ideal scenario politically.

JD Durkin: What is one factor about the rest of Q4, as we wrap up the month of October, that you’re paying attention to, Phil Rosen, that you think more people should also be paying attention to in the weeks ahead?

Phil Rosen: So I don’t expect this to happen soon. But if any of these hyperscalers, these big spenders on AI, come out and tell us that they’re going to spend less on CapEx in 2027 than they previously said last quarter, I think we will be in decently big trouble for the year ahead. I don’t think that’s going to happen. It probably won’t happen for another year or two, that these CapEx spenders come out and say, oh, we’ve got to start to pull back. But that will be the big red flag I’m looking for.

JD Durkin: I’ve got about 30 seconds left, so it’s time for my favorite question, Phil Rosen. Where can people go if they want to see more of what you’re writing, and more of your stuff? You’re the busiest one on Wall Street, I know.

Phil Rosen: Well, I write a newsletter every day. It’s called Opening Bell Daily. You can sign up for that for free. And then our team is working very hard on Silvia, at Silvia.com. It’s how I manage my portfolio, using superintelligence, and it’s free. It’s pretty good. I’m using it probably more than I should. I use it every single day, but I think people should go check that out.

JD Durkin: And Phil got my text for both of us to rock our green. There we go. Green to the market today. My very good friend, the one and only Phil Rosen. Come back and see us again soon.

Phil Rosen: Thank you very much.

The Federal Reserve held rates steady as expected, with markets looking ahead to a possible hike in December, while investors weigh seasonal trends and the upcoming midterm elections. On Taking Stock, JD Durkin speaks with Phil Rosen, chief market strategist at Silvia, about why he sees AI as the main macro driver, what history says about the fourth quarter, and the red flag he is watching in the weeks ahead.

Rosen says markets broadly expected no move from the Fed today and are focused on December, noting about an 82% chance of a hike heading into the new year. He argues that AI is both the main driver of earnings and the main macro driver, and that a 25-basis-point move in either direction is unlikely to change the equity story, calling the Fed an outdated institution as the biggest AI spenders have plenty of capital and are tapping debt markets. On seasonality, he says October has a reputation for crashes such as 1929, 1987, and 2008, but has averaged a gain of about 1% since 1950, setting up the fourth quarter, which he says is typically the strongest of the year.

Rosen says that historically, regardless of which party controls Congress or the White House, investors have fared well in post-midterm years, which have averaged 17% annual returns, and that the fourth quarter of a midterm year has averaged about 6% compared with 2% to 3% in other years of the cycle. The biggest red flag he is watching would be hyperscalers signaling lower AI capital spending for 2027 than previously guided, though he does not expect that for another year or two. He adds that he writes the free daily newsletter Opening Bell Daily and uses Silvia to manage his own portfolio.

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