Patrick J O'Hare, Chief Market Analyst, Briefing.com "War, Rates and Elections: What’s Ahead for Wall Street"

Have you ever seen one like this? So we've got I mean, the economy is slipping.

It's no higher, no fire.

And interest rates are the highest in over two decades.

And we're within an eye blink of new all time highs of a lot of these averages.

How do you explain this?

Yeah, well, from an index perspective, the easy explanation is that the mega cap stocks are holding up remarkably well.

There's still a lot of buying interest in the NVIDIAs and the Apples and the Googles and the Microsofts of the world.

And just given that you have that market cap weighted index, the strength in those names is just overshadowing weakness below the surface for a lot of other stocks.

So it's deceptive.

It's a little deceptive at the index level.

I think when you look more at the equal weighted S&P 500, which has registered seven consecutive weeks of declines, shows a little bit more of the concern related to rising interest rates, elevated costs of living, and a sense that those things may not ease anytime soon.

And so maybe ironically, even you get these mega cap stocks acting as defensive issues, because they have such deep pockets, they have such strong market share positions, and because they're at the forefront of the AI build-out.

And so there's a lot of faith in the future earnings potential for these companies.

So they're playing the

role that gold and bonds and other defensive positions used to play? Yeah.

Well, maybe in terms – yeah, to a certain extent, but even within the stock market, they seem to be playing the role of the consumer staples and the healthcare sectors and the utility stocks, right? They just continue to attract both offensive and defensive-minded investors because of where they're situated right now and because they have – frankly, haven't really given investors a lot of reason to – to worry about the strength of their earnings power.

That's why when we go into every earnings reporting season, you're always hanging there on knife's edge wondering if this is the one where you're going to hear these companies talk about a deceleration in growth, which then reinforces a lot of these bearish arguments leading up to these all-time highs for these stocks.

But really, earnings have held up I think remarkably well.

I mean, not just for that handful of stocks, but overall, looking at their earnings results, they're still beating and raising.

That's right.

And that's been the most important component in all this is, you know, when we talk about how you've got higher oil prices and higher interest rates and geopolitical conflict and, you know, the uncertainty around the midterm elections and all of that, you know, it gets talked about.

But then you have a market sitting at all-time highs because the great fallback, the great safety net is that you have this tremendous earnings power going on.

We're looking at about, I think 32% year-over-year growth in 2026 and strong revenue growth to boot.

And that, of course, is being driven by these companies we've talked about, these mega cap names that are just out-earning themselves, it seems like.

And it's making a huge difference at the index level.