Published September 4, 2026
Having just finished up earnings announcements for the 2Q26 quarter, one thing for certain is that corporate earnings, particularly for large companies, have rarely been stronger. Corporate-friendly policies, record low corporate income tax rates, easy credit conditions and a softening of the administration’s initial trade war/tariff posture have all been a tailwind for corporate America. Combine this with the AI investment cycle and corporate earnings have ripped to record highs yet again.
The quarterly change has been stunning with profits jumping $300B in single quarter. What company contributed the most to the jump in corporate earnings you ask? For the first time ever, the largest contribution to the rise in earnings was not in the S&P500. In fact, this company is not even public… yet. It was Anthropic, the AI company that makes Claude, the widely used AI large language model and conversation assistant that is increasingly a part of everyday corporate and government use around the world (millions of consumers use Claude as well, but the vast majority of consumers aren’t paying customers). Google and Amazon are major shareholders and as Anthropic’s valuation jumped to a hard-to-comprehend $965 billion in May from an already eye-popping $380 billion in February of this year. Companies holding equity stakes in Anthropic (and other private companies) have to recognize these gains in their earnings and thus corporate earnings showed an enormous pop in the “other” category (see chart below), making up literally half the rise in corporate earnings for the quarter.
Market Update
Weekend US strikes against Iran and Iran retaliating against US bases in Jordan drove the price of oil to nearly $86 on Monday, a recent high. Bond yields marched higher with the benchmark 10Y treasury jumping to 4.75%, its highest level in over 19 months, on fears that renewed energy shocks would exacerbate inflation. On the day, the S&P500 and the NASDAQ 100 each lost 0.3%.
Selling intensified on Tuesday, led heavily by technology shares: the NASDAQ 100 fell 1% and the S&P500 slid 0.7%. Oil Prices surges another 5% after further U.S. airstrikes against the IRGC, closing above $90 per barrel. The massive energy spike triggered a severe global bond rout. The 10-year Treasury yield surged to 4.8% and bond traders aggressively boosted the implied odds of a September Fed rate hike to over 68% following the hawkish tone previously struck by Fed Chair Kevin Warsh. In the after-hours session, Dell Technologies (DELL) skyrocketed 10% after raising its full-year revenue outlook by $25 billion due to historic AI server demand.
Wednesday brought a broad-based relief rally as bond yields stabilized after Fed Chair Kevin Warsh hinted that a September rate hike was not a certainty. Both the S&P500 and the NASDAQ 100 rose just under half a percent.
A modestly flat week all around: the S&P500 (SPY) gained 0.11% and the NASDAQ (QQQ) rose 0.14%, small cap stocks (IWM) posted a slim 0.09%.
Warm wishes and until next week.