Wall Street strategists expect the S&P 500 to generate healthy gains for a fourth straight year, bolstered by robust corporate earnings and accommodative monetary policy from the Federal Reserve.
Strategists' average price target for the index stands at 7,600 for 2026, or a gain of more than 9%. While this aligns with the market's historical average annual return, the S&P 500 rarely delivers "average" gains in practice.
Although stocks ended 2025 up an impressive 16% on a price basis, the path was volatile. The S&P 500 nearly fell into a bear market following the "Liberation Day" tariff shock in April, while sluggish job growth and sticky inflation complicated the Fed's interest rate calculus. Ultimately, resilient consumer spending and another year of double-digit earnings growth fueled a second-half rally.
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With the boom in artificial intelligence (AI) spending now expected to shift toward AI earnings, bullish sentiment abounds. Indeed, from the nation's largest banks to boutique investment firms, no major strategist expects the S&P 500 to end 2026 in the red. However, the degree of optimism varies: Oppenheimer remains the most sanguine, projecting a 15% return, while BofA Securities expects a more modest gain of just 3%.
Regardless of the target, the prevailing sentiment remains strong, with strategists counting on continued earnings growth, lower interest rates and an increase in stock buybacks. To get a sense of what's on strategists' minds as we ease into the new year, see a selection of commentary below.
2026 market outlook: the experts weigh in
"The AI boom is likely to remain a central focus for markets in 2026. The good news is that the productivity benefits are probably only just beginning and there is room for AI investment spending to continue in anticipation of those benefits. The macro imbalances that contributed to the end of the late-1990s tech bubble are also less visible so far. Markets have (as is typical) run further ahead of the macro. Aggregate valuations are not as high as they were at the end of the tech bubble but are further along that path than the macro story. And the market has already built in significant benefits from AI into equity prices, especially in areas that are directly involved in the provision of models and related infrastructure." – Goldman Sachs
"Both economic growth and inflation should heat up in early 2026 due to OBBBA impacts. Thereafter, however, higher tariff levels and lower immigration will cause growth to slow and inflation to cool. A wide range of views across Fed officials suggests a shallow easing path; we expect the Fed will reduce rates two to three times through 2026. Valuations, earnings and AI look bubbly but are underpinned by solid fundamentals. Investors should prioritize quality and focus on secular, rather than cyclical, themes, like the broadening AI ecosystem and deregulation in financials." – J.P. Morgan Asset Management
"We stay overweight U.S. stocks and the AI theme, supported by robust earnings expectations. Strong corporate earnings, driven in part by the AI theme, are supported by a favorable macro backdrop: continued Federal Reserve easing, broad economic optimism and less policy uncertainty, particularly on the trade front." – BlackRock
"Equity markets are broadening, with leadership moving beyond the original AI mega‑cap names to include companies building the physical backbone of AI and those positioned to benefit from broader sector rotation. International and small‑cap equities are increasingly attractive, supported by fiscal stimulus and improving cyclical conditions outside the U.S." – T. Rowe Price
"Growth will likely soften over the next few quarters as tariffs continue to be implemented, while inflation remains above target at 3%, keeping interest rates higher for longer. A reacceleration will follow. This slowdown will most likely be followed by an AI-fueled recovery. Put another way, we are not in for a recession. Although as of this writing, the consensus is predicting a 30% recession risk for the U.S. in 2026,2 which should keep us all on alert. A continued K-shaped economy. We expect ongoing strength at the top of the income distribution, strain at the bottom and a widening dispersion in spending patterns in the year ahead, creating risks for the broader economy." – Apollo Global Management
"We believe U.S. capital markets conditions will remain constructive in 2026, supported by modest Fed easing, targeted liquidity support, and a pro-growth fiscal policy backdrop ahead of midterm elections. These factors are typically supportive of resilient corporate profitability, which should in turn prevent a sustained uptick in layoffs. We expect AI to remain a concentrated driver of loose capital markets conditions, with a strong virtuous cycle of earnings growth and capex intentions rewarded by the market." – New York Life Investments
"Cycle studies can be a helpful guide to a stock market outlook, although never a gospel. Unless you've been living under a rock, you know we're heading into a midterm election year in 2026. Shown below is NDR's four-year presidential cycle performance pattern. Notable is the fact that this year's performance, after undershooting the historical trend significantly into 'Liberation Day' turmoil, has been significantly overshooting the trend since then. That doesn't necessarily mean reversion-to-the-norm is about to kick in, but in keeping with historical trends, we do expect significant market gains to be more difficult to come by in 2026." – Charles Schwab
"The factor most likely to shape long-term macroeconomic outcomes in 2026 – whether positively or negatively – is technological rather than political. Artificial intelligence, in particular, has the potential to drive sustained productivity growth, which could lift GDP and influence interest rates and other key economic variables. However, the rapid expansion of AI infrastructure, especially in the absence of clear monetization strategies, introduces downside risk. If investor sentiment shifts, the resulting pullback could have significant macroeconomic implications." – Morningstar
"U.S. equities remain an integral component of a well-rounded global allocation, but we believe investors should tap a wider range of U.S. opportunities. Improving earnings growth in U.S. sectors such as health care, industrials and financials suggests equity returns can extend into a wider array of market segments. U.S. companies continue to benefit from deep capital markets, innovation clusters and a corporate sector with superior profitability. These advantages help explain the relatively higher valuations in the U.S. market. As we see it, U.S. equities remain an important component of global portfolios, but disciplined diversification and a highly selective approach are essential. The key for investors is to uncover companies with resilient business models, strong profitability and long-term growth potential." – Alliance Bernstein
"As we enter 2026, investors are wondering whether the powerful combination of AI innovation, fiscal expansion, and looser monetary policy can help the global economy break free from the gravitational pull of traditional 'end-of-cycle' dynamics and accelerate into a new era of growth. AI, energy and resources, longevity, and raw materials stand out as beneficiaries of both structural change and policy support. Rising debt points to a future of 'financial repression' – a regulatory and policy regime that channels central bank savings and resources into government bonds, suppressing yields. Meanwhile, the intersection of trade policy, domestic policy, and geopolitics reinforces the importance of portfolio hedging and multi-asset diversification." – UBS
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