Riyadh's Airport Goes Dark... and Stocks Shrug
Saudi Arabia's major airport is shut after deadly attacks... Mr. Market's 'usual' Iran risk reaction... Earnings season starts tomorrow... 42 stocks, 58% of the growth... 'Inflation week' is here... Is AI a boom or a bubble?...
Saudi Arabia's major international airport is now shut down...
Over the weekend, at least 14 people were killed, while hundreds were injured, in two separate attacks at King Khalid International Airport in Riyadh, Saudi Arabia's capital city.
Footage from the attacks shows would-be passengers in a security line scatter after the building is hit by a surprise missile and/or drone... Another video shows people sitting at a gate suddenly taking cover amid a fireball.
The Iran-backed Houthis, operating out of Yemen (who we've been concerned about for years), said they were behind the attacks, just like others over the past few weeks. That includes striking oil facilities, another Saudi airport and Saudi Arabia's energy pipeline network.
It's terrifying stuff, and these attacks are a major escalation tied to the war in Iran. They could lead to large responses from Saudi Arabia and/or the U.S. military soon. And after the latest attack, the CEOs of ExxonMobil (XOM), Shell (SHEL), BP (BP), and others canceled plans to travel to Riyadh for a World Petroleum Council energy meeting this week.
At that very conference today, Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, said, "Energy security can't be taken for granted. The events of recent weeks are serious, our response must be equally serious."
The market shrugged...
Traders and investors looked at the news as nothing more – and perhaps even less – than the usual "Iran war risk" that we've seen over the past few months.
Today, oil futures and energy stocks moved higher again, with the energy sector up 1.5% to lead all major S&P 500 Index sectors. More than 300 of the S&P 500's names were higher, too, and the equal-weight S&P 500 Index was slightly up.
Like we wrote in our September 21 edition after an earlier Houthi attack on the Riyadh airport, the market is betting on a resolution to the war eventually – or, at least, the situation not getting substantially worse.
We can see this in energy prices. They're elevated but not spiking. And prices are still lower than they were in the spring. Sustained price rises and knock-on inflation from the past six months are weighing more heavily on consumers and businesses worldwide than they were back then. But that hasn't been enough to break the bull market, in large part because of other meaningful ongoing things for investors, like continued strong U.S. corporate earnings...
Here come the earnings reports...
As we noted briefly last week, earnings season is about to kick off. Big banks JPMorgan Chase (JPM), Goldman Sachs (GS), and Wells Fargo (WFC) get the quarter going with reports tomorrow. And this earnings season is expected to be a strong one...
According to estimates in FactSet's weekly Earnings Insight report, S&P 500 companies will report earnings growth of 29.6% in their third-quarter reports.
While that would be down from the second quarter's 52% growth rate, it would still mark the third straight quarter that S&P 500 companies (on average) grew their earnings by more than 25%.
So far, it has been great for the companies that have reported. Sixteen of the 19 S&P 500 companies that have released third-quarter reports have reported a "positive earnings surprise" – meaning earnings have beaten estimates.
And it could get even better as earnings season goes on. From FactSet...
At this point in time, 116 companies in the index have issued [earnings per share ("EPS")] guidance for Q3 2026, Of these companies, 44 have issued negative EPS guidance and 72 have issued positive EPS guidance. The number of companies issuing positive EPS guidance is well above the 5-year average of 42 and well above the 10-year average of 40.
By the time earnings season is over, FactSet estimates that the earnings growth rate for the S&P 500 could hit 35%.
AI in focus...
According to data from JPMorgan and Bloomberg, a good chunk of America's large-cap companies' earnings growth is thanks to the AI trend. Only 42 "AI companies" have accounted for 58% of S&P 500 earnings growth since January 2024. And that's still expected to be the case in the third quarter...
It's also possible that just 10 companies will account for roughly two-thirds of S&P 500 earnings growth in the third quarter, based on data from FactSet and Goldman Sachs, cited by Substack writer MacroVisor last week. Of those 10, six of them are AI stocks.
So AI stocks and those associated with the trend could remain in the driver's seat. As we wrote last week...
FactSet predicts that five of the 11 major S&P 500 sectors will report double-digit growth, including four connected to the AI boom: energy, information technology, communication services, and materials.
For a good part of the past two years, AI stocks have been the only ones "working." JPMorgan's data shows that the same set of 42 stocks we referenced earlier has also contributed to 67% of the S&P 500's return since January 2024.
We get some AI earnings this week, too... Semiconductor equipment giant ASML (ASML) and chipmaker Taiwan Semiconductor Manufacturing (TSM) have their reports on Wednesday and Thursday, respectively.
That will give us the first clues on whether the AI theme this earnings season can continue powering the market higher.
What else to watch this week...
It's "inflation week" with the latest round of official government statistics coming out.
The latest consumer price index data will be released Wednesday morning, and the producer price index follows on Thursday.
These numbers, which reflect price changes for the month and year-over-year throughout the economy, could swing markets one way or another based on what traders think the Federal Reserve will or won't do in response.
Any data that helps the case for an interest rate "hold" would be bullish. But even numbers that don't might not land terribly – in the near term, at least. After all, earnings are expected to be strong, the AI trend is still booming, and the market is shrugging off the war in Iran. Whether that's "right" or "wrong," we'll know soon enough.
We're skeptical that the AI bull run will end without big-time pain for unprepared folks... and so long as energy and other infrastructure are being attacked in the Middle East, there's inherent long-term inflation risks that haven't been realized yet.
But, as we always say, Mr. Market doesn't necessarily care what we think. And the good news is we don't need to completely predict the future down anyway. You simply need a long-term plan.
Own shares of high-quality businesses, look for attractive entry points, and always be cognizant of inflation. Hard assets like gold can protect your wealth, and stocks are inflation protection too.
An attractive buying opportunity...
This one comes from Stansberry Research senior analyst Gabe Marshank...
He's eyeing the opportunity in "spinoffs" right now.
As Gabe, editor of Market Maven and a former Wall Street hedge fund analyst, wrote to you over the weekend in our Masters Series, some exceptional companies are often buried from investors...
While some large companies perform well, they might have an underlying segment that could truly thrive if it were split off from the main business. When that happens, history shows that these businesses can perform well... even beating out their parent companies.
But it's unwise to buy just any spinoff. To make the most out of your investment, you need to understand what to look for. That's why Gabe has a five-part "scorecard" to identify the strongest of these opportunities.
And right now, Gabe says some of these segments are being forcefully sold off. Wall Street institutions won't touch them, sending share prices far below their value. It's the perfect opportunity for investors to buy in. You see, once the rest of the market realizes the worth of these stocks, it's only a matter of time before they start to soar.
Gabe's using the same strategy that made his former firm more than $100 million, and it's one that some of the world's greatest investors use. To learn more and see it in action, click here.
The $7 Trillion AI Debate: Is This the Next Dot-Com Bubble?
Trillions of dollars are pouring into AI investments. Companies are racing to build data centers, buy Nvidia (NVDA) chips, and develop increasingly powerful AI models. But there's one question investors can't afford to ignore: Will all this spending actually make money? Or are we watching the next massive stock market bubble?
In this special episode of Top Stocks, recorded live at the Stansberry Conference in Las Vegas, our Director of Research Matt Weinschenk brings together two of our senior analysts with completely opposing views on the future of AI.
On the bullish side is Alan Gula, a former Goldman Sachs and Barclays analyst who believes the demand for AI computing power is just getting started. On the bearish side is the aforementioned Gabe Marshank, a former analyst at SAC Capital and Greenlight, who warns that massive overspending could destroy investor returns. They discuss one massive question: Is AI a boom or a bubble?
Click here to watch this episode – for free – right now on our YouTube page. Or you can find the episode here, on the members section of StansberryResearch.com under "Media."
New 52-week highs (as of 10/9/26): AbbVie (ABBV), Arista Networks (ANET), Alpha Architect 1-3 Month Box Fund (BOXX), iMGP DBi Managed Futures Strategy Fund (DBMF), Datadog (DDOG), Exelixis (EXEL), GitLab (GTLB), Hagerty (HGTY), Hewlett Packard Enterprise (HPE), Cloudflare (NET), Okta (OKTA), Palantir Technologies (PLTR), Philip Morris International (PM), Qualys (QLYS), Saturn Oil & Gas (SOIL.TO), Ternium (TX), Visa (V), and Zebra Technologies (ZBRA).
In the mailbag, some thoughts on mortgage rates and costs, which we wrote about last week... and Dan Ferris answers a question stemming from his latest Friday essay. (He's back!)... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"In 2010 I financed the purchase of my home with a 30 yr. fixed rate mortgage. In the sixteen years since I have never missed or gone past the grace period for making a payment, but my payments have gone UP, noticeably, over the years. There is the little matter of an escrow account, which pays my property taxes and insurance costs. While the money sits in the escrow account, waiting for the above-mentioned payments to come due, it receives a decent rate of interest (for which I am taxed) but not enough to put a dent in the inexorable rise in property taxes and insurance costs. Hence, the monthly check I write to my mortgage company is noticeably larger than the checks I was writing to them in 2010..." – Subscriber R.F.G.
"Dan should have been a professor. He explains things more clearly than any college professor I've ever had. I'm happy to pay my 'tuition' to Stansberry to learn from Dan. So, here's a question that I cannot figure out, but maybe Dan can explain.
"We know that the dollar is the world reserve currency and that many countries hold dollars. Here's my dumb question: how did they buy those dollars? If they 'exchanged' their peso (or any other currency) for dollars, who holds the pesos that they spent to buy the dollars? If the dollar is a safer asset, why would anyone be willing to sell their dollars for a less-safe asset like pesos? If I have $100, and I agree to sell them for an amount of pesos that is equal to $100 on the day of the transaction, it would seem that the only way for that deal to work for me is if the pesos gained value against the dollar so that I could someday buy back more than $100 with the pile of pesos I collected when I sold the $100 previously?" – Stansberry Alliance member Darrell W.
Dan Ferris comment: The other countries mostly acquire the dollars by exporting goods to the U.S. It's the flip side of that trade deficit you've no doubt heard about. Our biggest export is dollars. Countries can also get them through Federal Reserve swap lines.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
October 12, 2026