US equities remain the preferred allocation for at least one major asset manager as third-quarter 2026 earnings season gets under way. Amanda Agati, chief investment officer at PNC Asset Management, told Bloomberg This Weekend that strong corporate fundamentals and resilient consumer spending could continue to underpin domestic stocks, even as investors weigh how much of the market’s advance is already reflected in prices.
Agati’s stance rests on a straightforward comparison: US earnings growth has outpaced that of most developed international markets, and she said that gap keeps her favoring domestic equities. The implication for portfolio construction is that exposure to US benchmarks such as the S&P 500 and the Nasdaq-100 remains the core equity position, with developed international markets playing a secondary role rather than a substitute.
Earnings Season Becomes the Test
With reporting for the July-through-September quarter now underway, the market’s attention shifts from macro headlines to company-level results. Agati framed the coming weeks as a test of whether the earnings backdrop can validate current valuations. Corporate fundamentals, in her view, remain a source of support, and consumer spending has shown enough resilience to keep the revenue side of the ledger intact for many businesses.
That combination matters because equity markets have spent much of the past year pricing in a favorable earnings trajectory. If results and forward guidance confirm that trajectory, the case for US stocks strengthens. If they disappoint, the same valuations that reflect optimism could become a source of vulnerability. Agati’s comments suggest she sees the balance of risk still tilted toward the constructive case, but the emphasis on fundamentals implies the market will need evidence rather than narrative.
The AI Question Moves Beyond Big Tech
A central issue for investors this season is whether spending on artificial intelligence is producing measurable returns outside the largest technology companies. Agati said investors will be watching for exactly that evidence. The concern is not whether AI investment is occurring — capital expenditure across the technology sector has been substantial — but whether the benefits are broadening into software, industrials, financials, and other areas of the market.
Broadening would matter for market breadth. A rally carried by a handful of mega-cap names is more fragile than one supported by improving earnings across sectors. If AI-driven productivity and revenue gains show up in a wider set of companies, the US equity case Agati describes becomes less dependent on a narrow group of leaders.
What to Watch
For investors, the practical takeaways are the pace of earnings revisions, the tone of forward guidance, and any sign that consumer demand is cooling. Agati’s preference for US over developed international equities is a relative call, not an absolute one — it reflects expected earnings growth differentials rather than a claim that US stocks are inexpensive. As the season progresses, the data will determine whether that preference continues to be rewarded.
Source: bloomberg.com