by AdvisorAnalyst.com Editorial Team
What separates a durable market thesis from a reactive one is whether it holds up not just when conditions cooperate, but when they don't. Over five weeks of Belski Briefs from Humilis Investment Strategies1,2,3,4,5, Brian Belski and his team have done exactly that — building, testing, and reinforcing a single structural argument: 2026 is an earnings-driven market, and everything that has happened since January, including the geopolitical shock, the fear-driven selloff, the sharp recovery, and the subsequent pullback, flows logically from that premise.
The Thesis: Multiples Are Done, Earnings Are Doing the Work
The May 18 brief establishes the intellectual scaffolding for everything that follows. Coming into 2026, Belski had argued that the market was transitioning away from multiple expansion as its primary return driver. That transition, he noted, carries consequences investors need to understand. "Historically, earnings driven markets tend to be more volatile, less euphoric, and more dependent on fundamentals," the team writes. "That is exactly what we believe investors are seeing today."
The evidence supporting this call had already materialized by mid-May. The S&P 500 was up roughly 8% year-to-date, while the forward P/E ratio had contracted approximately 3% — gains powered by earnings, not sentiment. The blended Q1 2026 earnings growth rate had climbed to 27.7%, which Belski noted would mark the strongest earnings growth since Q4 2021, with 84% of companies reporting positive EPS surprises.
Critically, the team frames short-term weakness as a feature, not a bug. After a 12.7% S&P 500 advance since April 1 — itself the product of easing Middle East tensions and blowout earnings — two days of selling pressure arrived. Rather than revise the outlook, Belski treats the dip as confirmation. "Days like these are constructive because they remind investors that markets do not move in a straight line, especially earnings driven markets."
Earnings Season Closes: The Numbers Get Better
By May 26, with 94% of S&P 500 companies having reported, the blended Q1 earnings growth rate had risen further to 28.4%. The team's initial expectation had been roughly 13% growth. "This is an astonishing pace of growth and one that has surprised analysts across Wall Street," Belski writes, adding that "growth at this magnitude makes us even more positive on the market through the remainder of the year."
With the earnings catalyst now largely priced in, the team openly welcomes a pullback. "We would welcome a modest pullback as a healthy 'cooling off' period for the market," the brief states, specifying that a 5% decline would represent a buying opportunity for long-term investors. Full-year S&P 500 earnings growth expectations had by then risen to 22.1%.
SMID: A Macro Pause, Not a Thesis Break
The June 1 brief shifts the lens from broad market to the SMID cap trade — small and mid cap stocks — which Belski had entered 2026 bullish on. The thesis: an earnings-driven market with broadening participation beneath the surface should benefit smaller companies.
It worked, until it didn't. The escalation of Middle East conflict pushed oil prices higher, reignited inflation fears, drove yields up, and rotated investors back toward large, more durable companies. The 10-year Treasury yield reached 4.6%. "SMID cap stocks have been a casualty of that move," the team acknowledges.
But Belski refuses to abandon the call. "In our view, this was more of a macro driven pause than a breakdown of our longer-term bullish view." With geopolitical pressures beginning to ease, oil retreating, and yields pulling back, the team argues the SMID trade can reaccelerate — "supported by earnings growth, attractive valuations, and a broader market backdrop."
The Pullback Arrives — and Gets Contextualized
June 8 delivers what Belski had anticipated: a sharp Friday selloff, with the S&P 500 declining 2.6% and the Nasdaq 100 falling 4.8%. The team contextualizes it against the preceding rally's magnitude. In just over a month following the Middle East ceasefire, the Nasdaq 100 had advanced more than 20% while the S&P 500 gained roughly 15%. "Although we believed the move was warranted by one of the strongest earnings seasons in recent years, markets rarely move in a straight line."
The constructive posture is unchanged. "Volatility is the price of admission for long-term investors," the team reiterates, adding that "pullbacks are a normal and healthy part of any bull market and help reset sentiment, valuations, and positioning." S&P 500 earnings are still expected to grow more than 20% for the full year, and Belski views any continued weakness as an attractive entry point heading into the second half.
Volatility Confirmed as the Defining Theme
The June 15 brief closes the five-week arc by returning explicitly to the year's master narrative. Belski points back to a March brief titled Volatility Is the Price of Admission — a premise, he notes, that flows directly from the earnings-driven market call. The previous week had delivered intraday swings of more than 3%, with markets remaining, as he puts it, "highly headline driven" around the Iran conflict, AI capital spending, and elevated corporate investment.
"We believe the market can continue to trend higher, just not in a straight line," the team writes. "We view this volatility as a healthy characteristic of both a bull market and an earnings-driven environment, one that should continue to create attractive entry points for long-term investors."
Key Takeaways for Advisors and Investors
- The earnings-driven thesis is intact and on track. Q1 2026 blended earnings growth of 28.4% vastly exceeded the ~13% expected at the outset, and full-year S&P 500 earnings growth is now projected at 22.1%. Gains are being earned, not inflated.
- Volatility is structural, not situational. Belski flagged this at the start of the year. Earnings-driven markets are historically more volatile than multiple-expansion markets. Advisors should frame client expectations accordingly — this is the operating environment, not an anomaly.
- Pullbacks are entry points, not exits. The team has consistently characterized 5–10% corrections as buying opportunities. Investors who panic-sold in March missed a 12–15% recovery. The same framing applies going forward.
- SMID remains a conviction call, with patience required. The macro headwinds from the Middle East conflict caused a temporary setback. As yields pull back and geopolitical pressure eases, the earnings and valuation case for small and mid caps reasserts itself.
- The second half setup is constructive. With the Q1 earnings catalyst digested, a cooling-off period was expected and welcomed. Belski's base case: the pullback improves market structure and creates a more sustainable launch pad for H2 2026.
About Brian Belski & Humilis Investment Strategies
Brian G. Belski is CEO and Chief Investment Officer of Humilis Investment Strategies, LLC, where he leads a team of market strategists focused on fundamentals-driven investment research. A widely followed voice on North American equity markets, Belski brings decades of institutional investment experience to his market commentary and portfolio strategy work. Humilis Investment Strategies' investment solutions are available through ETFs listed on Canadian and U.S. stock exchanges.
Footnotes:
Belski, Brian G., Nicholas Roccanova, Sooyun Hong, Ryan Edwards, and Cole Jackson. "A Healthy Checkup." Belski Briefs, Humilis Investment Strategies, LLC, 18 May 2026.
Belski, Brian G., Nicholas Roccanova, Sooyun Hong, Ryan Edwards, and Cole Jackson. "A Strong Fundamental Setup." Belski Briefs, Humilis Investment Strategies, LLC, 26 May 2026.
Belski, Brian G., Nicholas Roccanova, Sooyun Hong, Ryan Edwards, and Cole Jackson. "Time to Revisit SMID." Belski Briefs, Humilis Investment Strategies, LLC, 1 June 2026.
Belski, Brian G., Nicholas Roccanova, Sooyun Hong, Ryan Edwards, and Cole Jackson. "A Welcomed Pullback." Belski Briefs, Humilis Investment Strategies, LLC, 8 June 2026.
Belski, Brian G., Nicholas Roccanova, Sooyun Hong, Ryan Edwards, and Cole Jackson. "Volatility Is Still the Price of Admission." Belski Briefs, Humilis Investment Strategies, LLC, 15 June 2026.
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