CWS Market Review – October 2, 2026

“I made my first investment at age eleven. I was wasting my life up until then. – Warren Buffett

On Wednesday, the third quarter came to an end. Overall, Q3 was a decent quarter for Wall Street. The S&P 500 gained 2.03%. The Nasdaq was up 2.47%, and the Dow lost 2.70%. A gain of 3% for the quarter (before dividends) is not far from the long-term average for stocks.

The real attention lately has been on the bond market. Yields continue to be high, and it appears that yield increases are themselves increasing. In February, the yield on the 19-year Treasury was just under 4%. Now it’s up to 5.26%, which was Wednesday’s closing yield.

This impacted just about anything you borrow money for (houses, cars, vacations). The average 30-year fixed-mortgage rate spiked to 7.28%.

In this week’s issue, I’ll discuss the outstanding earnings report from FactSet. The company beat expectations and offered optimistic guidance for next year. The stock has grown its earnings for the last 30 years in a row.

I’ll also go over the mess at FICO. I think Bill Pulte has it in for them. The stock got creamed this week.

I also have some Buy List updates for you, including two stocks that are starting to look like bargains.

The Economic Outlook Is a Mixed Bag

The big economic report this week is this morning’s jobs report. Before that were a couple of reports I wanted to highlight.

Headline PCE, which is the Fed’s preferred measure of inflation, rose by 0.3% last month. The core rate rose by 0.2%. That’s not bad.

Personal income rose 0.2%. Nominal consumer spending jumped 0.9%, and real spending rose 0.6%.

The third estimate for Q2 GDP growth was revised up to a 2.2% annualized rate, from 1.5% in the second estimate. Earlier quarters were also revised higher in the annual update.

The job-openings report (the JOLTS report) was little changed at 7.1 million. Hires were 5.2 million and separations 5.1 million. Layoffs were essentially flat. That is still a low-hire, low-fire economy.

ISM manufacturing was 54.5, essentially unchanged from 54.6 and slightly under consensus. This marks the ninth month of expansion. The Atlanta Fed’s GDPNow tracker stands at 3.7%.

Overall, this is a mixed picture for me. There are reasons for optimism, but those higher interest rates are not helping.

FactSet Beats Earnings and Raises Guidance

Before the opening bell on Wednesday, FactSet (FDS) reported its fiscal-Q4 earnings. This will be our final Buy List earnings report until earnings season starts up.

For the quarter, FactSet earned $4.52 per share. That’s up 11.6% over last year, and it beat the Street by 17 cents per share. For the whole year, FactSet made $18.01 per share. That’s an increase of 6.1%. FactSet’s full-year guidance had been for $17.25 to $17.75 per share.

Overall, it was a solid quarter for FDS. Organic revenues were up 7.1%, and organic ASV increased by 7% to $2,568.2 million. Annual ASV retention is above 95%. During Q4, average renewal-contract length increased by about 30%.

During Q4, FactSet returned more than $179 million to shareholders. That’s $138 million in buybacks and $41 million in dividends. During fiscal 2026, FactSet returned $808 million to shareholders and raised its dividend for the 27th year in a row.

CEO Sanoke Viswanathan said, “FactSet delivered strong results, highlighted by a record increase in organic ASV for both the fourth quarter and fiscal year with continued momentum across our AI and data solutions.”

For Q4, net cash provided by operating activities was $204.7 million, and free-cash flow was $177.3 million. This was the 30th consecutive year in a row that FactSet has increased its earnings, and revenues are up 47 years in a row.

For 2027, FactSet expects organic ASV to be up 5% to 6.5% and revenues to be between $2.6 and $2.625 billion. FactSet also expects earnings to be between $19.25 and $19.65 per share.

The stock rallied about 4% on Wednesday and another 3% on Thursday. FactSet remains a buy up to $300 per share.

Pulte Strikes Again

On Tuesday, shares of FICO (FICO) got creamed for a 26.5% loss. This came after the Federal Housing Finance Agency said that mortgage pricing will be simplified. This was FICO’s worst day since May 1989.

Bill Pulte, the director of the Federal Housing Finance Agency, said mortgage pricing will be simplified and that the new structure will incorporate VantageScore, a direct competitor to Fair Isaac’s FICO score.

The concern is that this will threaten FICO’s dominance. On Monday night, Pulte posted on social media that his agency would simplify mortgage pricing and that Fannie Mae and Freddie Mac are moving to a single pricing grid.

TransUnion said it would keep VantageScore 4.0 at $0.99 per pull through December 2028, well below typical FICO pricing. Rocket Mortgage had already moved to make VantageScore 4.0 its preferred model for eligible loans.

Pulte said that the new pricing grid structure will use VantageScore, which is a joint venture of the credit agencies. This means that potentially, people can bypass FICO. Pulte has been talking about this for a long time. The stock had a decent pushback rally on Thursday as investors reassessed how much pricing power FICO might actually lose. For now, I’m lowering our Buy Below on FICO to $800 per share.

Buy List Updates

I wanted to highlight two of our Buy List stocks this week that have fallen to attractive valuations. I enjoy watching high-quality stocks fall for transient or flimsy reasons.

The two stocks are Abbott Labs and Sprouts Farmers Market. Let’s start with Abbott Labs (ABT). This is a company that has increased its dividend every year for the last 54 years in a row.

Shares of Abbott improved for us over the summer, but it’s recently reversed course and fallen again.

In July, Abbott said that it made $1.31 for Q2. The company told us to expect $1.25 to $1.31 per share.

This was a solid quarter for Abbott. Q2 sales rose by 13.0% to $12.6 billion, and comparable-store sales rose by 4.8%. The best news is that Abbott increased its earnings guidance for this year.

Abbott had previously said it was expecting 2026 earnings to range between $5.38 and $5.58 per share. Now the company says it’s expecting earnings to fall between $5.45 and $5.60 per share. Wall Street had been expecting $5.48 per share. For all of 2026, Abbott projects comparable-sales growth of 6.5% to 7.5%. Barron’s said ABT had its best day in 24 years. Abbott is a buy up to $115 per share.

Sprouts Farmers Market (SFM) has also trended downward recently. The stock was downgraded by Deutsche Bank and some others. Sprouts also has a new CEO, which can be a concern for investors. The most pressing problem for Sprouts is weak comparable-store sales.

The good news is that Sprouts is steadily getting better. For Q2, SFM’s net sales were up 5% to $2.3 billion, and comparable-store sales were down 1%. That was expected.

Earnings came in at $1.37 per share, which was a three-cent beat. Sprouts now has 490 stores in 25 states. Sprouts ended the quarter with $224 million in cash and no balance on its credit facility.

For Q3, whose report is due out on October 28, Sprouts sees earnings between $1.20 and $1.24 per share and comparable-store sales between -0.5% and +1.5%. For the full year, SFM expects earnings of $5.32 to $5.40 per share and comparable-store sales of -0.5% to +0.5%. This week, I’m lowering our Buy Below price on Sprouts to $70 per share.

That’s all for now. The September jobs report is out later this morning. Wall Street expects to see a gain of 84,000 jobs. I’m also going to be paying attention to wage growth. Wall Street expects to see an increase of 0.3%. Frankly, this needs to improve. The consumer-credit report is due out on Wednesday, and the jobless-claims report is on Thursday. Tuesday October 13 is the unofficial start of earnings season. That’s when several of the major banks report results. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Posted by on October 2nd, 2026 at 7:12 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.