By Louis Navellier

Later this week, financial stocks will launch their third-quarter earnings season, and I expect most of the large banks will post strong results. At the same time, their loan loss reserves will be closely scrutinized for possible higher reserve increases for consumer defaults. Then, next week, other sectors will follow.

Some leading tech stocks have already reported earnings, and we’re seeing some record earnings for semiconductor and memory manufacturers. Last Thursday, Samsung Electronics reported that its third-quarter earnings surged 780.3% to $80.2 billion, while sales soared 126.6%. Samsung Electronics is the world’s largest memory chip manufacturer, and its amazing results bode well for memory stocks.

Looking forward, the fourth quarter is seasonally the strongest quarter of the year, and November is the second strongest month of the year. This November we will also have a second Russell re-alignment, so stocks added to the Russell 2000 and 1000 indices could surge from institutional buying pressure. I also expect we will have an early “January effect” in November, and that will set the stage for a potentially stronger January rise. Also, 2027 is the third year of the presidential election cycle, which is historically the best-performing year for the S&P 500 during the presidential cycle, so investor optimism is rising.

Here are the most important developments recently and what they mean:

– United Healthcare (UNH) reported better-than-expected third-quarter results and raised its guidance, so that is helping to lift the entire healthcare sector, since UNH is a major weight. Johnson & Johnson (JNJ) also announced better-than-expected third-quarter results and raised its guidance, which is good for the healthcare sector. Eli Lilly (LLY) remains my favorite pharmaceutical stock, and I expect it will also announce a third-quarter earnings surprise and raise its guidance.

– Pending home sales are now at a 12-year low, so it is obvious that higher mortgage rates are impeding home sales. There has been some relief this week in Treasury bond yields, but the inflation news this week will be critical. Specifically, the consumer price index (CPI) and producer price index (PPI). Economists are expecting the CPI and PPI to both increase 0.4% in September, while they expect that the core CPI, excluding food & energy, will rise 0.3%, and the core PPI to rise 0.2%. Obviously, if inflation comes in below economists’ estimates, Treasury yields should continue to meander lower.

– Crude oil prices remain firm, despite President Trump getting Russia to release diesel reserves to world markets. The shocking Houthi missile attack on Saudi Arabia’s Riyadh airport will obviously escalate the retaliation against the Houthis in Yemen, since there were at least 20 civilian deaths and hundreds were injured. Right now, Saudi Arabia’s refineries are operating, but five were temporarily closed when a pipeline to the Red Sea was closed over missile attacks.

– The British pound and euro continue to drop in value, while the U.S. dollar remains very strong. The Wall Street Journal had an article entitled “The Welfare State is Crushing Britain.” There is a contagion risk spreading in Europe. It is perceived that it is already too late for France, unless Marine Le Pen’s National Party wins national elections in 2027. Le Pen already controls the French Parliament, which is why there is so much gridlock. On the other hand, Britain does not have gridlock, but quantitative easing will clearly be necessary, so the British pound remains weak. All this international chaos bodes well for robust demand for U.S. Treasury securities.

Overall, earnings are one by one starting to drive stocks higher. A lot of market pundits think that stocks are priced for perfection, but I remain confident than when the third-quarter announcement season winds down that the S&P 500’s earnings will be up at least 33%. Fundamentally superior stocks in my portfolio are expected to announce over 100% earnings growth, so I have very high expectations and anticipate a spectacular year-end rally.