Empower's Norton: Market will grind forward as earnings cool, 'normalize' into '27

Marta Norton, chief investment strategist at Empower, expects a "grind it out" market for the rest of the year, setting up for "normalization" on earnings that keeps markets moving forward but at a slower pace in 2027. Norton says there is "less of a margin of safety" for valuation and for fundamentals, "which doesn't necessarily mean the market sells off, but it means maybe some of the momentum disappears." Norton also discusses rising fixed-income yields; she doesn't expect them to keep pushing higher, but just to stay near current levels for longer, raising costs of borrowing and making the growth environment more challenging. Norton also notes that anything that makes the artificial-intelligence evolution "look like more of a belly flop than a perfect 10 dive" would be "incredibly disruptive" to both the A.I. trade and the U.S. economy.

Vijay Marolia, chief investment officer at Regal Point Capital, looks ahead to the bull market's fourth birthday this week, and discusses the surprising chances that it will celebrate another anniversar next year; he also looks at current inflation numbers and how improvement in the inflation rate won't make consumers feel any better, and looks at why 2027 will be a pivotal year for the market, and explains why he will be focused more on revenue grwth than earnings strength in the year ahead.

David Trainer, founder and president of New Constructs, puts companies likely to miss third-quarter earnings in The Danger Zone, but singles out Coherent Corp. as a stock where the numbers appear to make a miss — and a subsequent reckoning on the market — look inevitable. Trainer makes it clear that while the headlines are focused on artificial intelligence, companies hiding earnings problems through accounting tricks come in all shapes and sizes, and from all industries, with the only real question being how long they can continue to use accounting rules to mask their true financial condition.