Inside Markets — Technical Resistance

The SPX has extended into technical resistance in the 6725-6805 zone ahead of Q3 earnings season. Consensus is looking for +6% YoY earnings growth in Q3 (down from 11% in Q2), which should be beatable despite a fading FX tailwind. In the short term, stock prices rise and fall based on estimate revisions. In our view, well-documented September seasonal weakness failed to materialize this year due to a  lack of material downside revisions coming out of sell-side industry conference season (began on 9/3). These industry conferences are usually a forum for management teams to direct analysts to lower/more reasonable out-year estimates. The lack of material downside revisions last month and the fact that October/November should mark peak tariff impact should make the upcoming earnings season even more important for the equity outlook. From a macro perspective, the message from history is very clear: Fed easing and recession avoidance tends to deliver meaningful equity upside.