October: The Q4 Reload

Citadel

Scott Rubner

Research

12 Pages

Scott Rubner of Citadel Securities argues that September reset positioning and valuations, setting up a more constructive fourth quarter for US equities. Topics include index concentration, earnings momentum, and returning buyers, including a corporate buyback window that reopens mid October. Corporate profits now sit at 14.9% of GDP.

Key Takeaways

Narrow index leadership: Four stocks contributed more than 200% of the S&P 500 third quarter gain while the rest of the index detracted.
Record profit share: Corporate profits reached 14.9% of GDP in the latest quarter, the highest share since 1947 and well above the 10.1% long-term average.
Midterm year seasonality: Since 1930, the S&P 500 has averaged a 5.6% fourth quarter gain in midterm years versus 2.9% across all years.
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