Citadel Securities strategist Scott Rubner told clients that major equity buyers are preparing to return in the fourth quarter following a sharp slowdown in September retail activity. Despite slowing economic indicators and high borrowing costs, the market maker expects corporate buybacks and systematic funds to drive a Q4 stock rebound starting around October 15.
- Citadel Securities, which handles about 35% of US retail stock trades, reports retail trading hit 0.94 times its one-year average in September (26% below June's peak).
- Corporate buyback blackout windows begin reopening on October 15, unlocking liquidity ahead of projected 27% S&P 500 quarterly EPS growth.
- September nonfarm payrolls added just 29,000 jobs against an 84,000 forecast, keeping unemployment at 4.2% as borrowing costs remain above 5%.
Market Reset and Returning Catalysts
In a Thursday note to clients, Scott Rubner declared that "September was the reset. Q4 is the reload," highlighting seasonal patterns where retail trading historically rises by about 8% on average from September to October over the past four years. Model-driven trading funds have slashed stock exposure to the bottom fifth of their range since 2024, creating potential dry powder for the quarter ahead. Meanwhile, Goldman Sachs dismissed talk of an S&P 500 earnings bubble as analysts forecast earnings per share to jump 27% this quarter. Rubner noted, "The story in 2026 has not been a low bar. Expectations have moved higher, and companies have continued to clear them by a wide margin."
Midterm Election Trends and Macro Headwinds
Historical trends support a Q4 rebound. Since 1930, the S&P 500 has averaged a 5.6% gain in the fourth quarter of midterm-election years, nearly double the standard 2.9% average. However, Rubner cautioned that "a constructive Q4 setup does not necessarily mean a clean start to October," pointing out that in 14 of those 23 midterm years, the quarter's lowest point occurred during October. Macroeconomic conditions also remain challenging after US nonfarm payrolls gained just 29,000 jobs in September, unemployment reached 4.2%, and borrowing costs held above 5%. While the S&P 500 index edged higher in September, most individual stocks fell.
Why It Matters
This anticipated liquidity injection across traditional financial markets has direct implications for risk assets, including cryptocurrencies. If corporate buybacks and retail buyers drive fresh inflows into equity markets after October 15, broader market liquidity could recover and stabilize investor sentiment. However, if October delivers a typical seasonal dip before rebounding, high-beta assets may experience short-term volatility before Q4 buying momentum takes hold.
