Dec. 29, 2025, 11:23 a.m. ET
At the big banks and the boutique investment shops, an optimistic consensus has taken hold: the U.S. stock market will rally in 2026 for a fourth straight year, marking the longest winning streak in nearly two decades.
There’s plenty of angst about the risks to the bull run that’s pushed the S&P 500 Index up some 90% since its October 2022 low. The artificial-intelligence boom could turn to bust. The economy — and the Federal Reserve’s interest-rate decisions — could defy expectations. And President Donald Trump’s second year could bring even more unanticipated shocks than his first.
But after three years when the equity market’s rip-roaring run made a mockery of any bearish calls, sell-side strategists are marching in lockstep optimism, with the average year-end S&P 500 forecast implying another 9% gain next year. Not a single one of the 21 prognosticators surveyed by Bloomberg News is predicting a decline.
“The pessimists have just been wrong for so long that people are kind of tired of that schtick,” said veteran market strategist and longtime bull Ed Yardeni. He expects the S&P to finish next year at 7,700 — up 11% from Friday’s close — yet even he finds the lack of dissent a little concerning.
“That’s where my counter instincts come out: Things have been going my way for so long that it is kind of worrying that everyone else seems to have become optimistic,” he said. “Pessimism is on the out right now.”
The sentiment was reinforced by the market’s volatile year, when early 2025 selloffs unleashed by DeepSeek’s potential challenge to U.S. AI companies and Trump’s chaotic trade war threatened forecasters’ optimistic targets.
As the S&P 500 slid toward a bear market by tumbling almost 20% from mid-February through early April, strategists slashed their forecasts at the fastest pace since the COVID crash — only to wind up bumping them back up as stocks staged one of the swiftest comebacks since the 1950s.
That extended what has been a vexing period for market soothsayers since the pandemic as the economy has been surprisingly resilient, even after Trump’s tariffs took aim at the globalization that has powered it for decades. The massive investment in AI — which has been poured into data-center construction and high-powered computer chips — has continued to push up the five tech giants that were responsible for nearly half of the S&P 500’s advance this year.
“It’s tricky because I think there’s been a great amount of uncertainty in the last five years, and particularly this year,” said Michael Kantrowitz, chief investment strategist at Piper Sandler & Co., who dropped the practice of publishing year-end S&P 500 targets. “When there’s a lot of uncertainty, investors are very myopic and reactive to different data points and it doesn’t take much to change the opinion and consensus.”
If the Wall Street forecasters are correct in 2026, however, stocks are heading for their longest stretch of annual gains since the lead-up to the global financial crisis. The highest targets among the cohort, if they materialize, would also mark the first time the S&P has seen four years of double-digit returns since the dot-com bubble of the 1990s.
Christopher Harvey, longtime strategist who moved this year to CIBC Capital Markets from Wells Fargo Securities, was one of few prognosticators who stuck to his guns through this year’s volatility — anticipating that the S&P 500 would end the year at 7,007 — and got it right. The index closed at about 6,930 on Friday, just 1% short of his estimate.
Harvey expects the benchmark to end 2026 at 7,450, implying an approximately 8% gain. But he said “people are sleeping on a lot of macro risks.”
Among them: The possibility that the Fed will hold interest rates steady for longer than traders are currently expecting; a push by the United States to raise tariffs on Canada or Mexico; or corporate executives who may try to manage earnings expectations down after what has been a solid run.
“That could begin to upset the applecart,” he said.
Like virtually everyone else, the analysts at JPMorgan Chase & Co. were surprised by the turmoil that swept through stocks early this year. By April, when Trump’s trade war rocked markets, they abandoned the positive outlook they had heading into 2025. They became the most bearish among the strategists tracked by Bloomberg, predicting the S&P would end 2025 down 12%.
In June, the bank ditched its pessimistic view to predict small gains. But even that forecast proved too conservative, with the S&P ultimately rallying nearly 18% this year.
For 2026, JPMorgan has given up on its cautious stance, anticipating the S&P will rise to 7,500 on the back of solid corporate earnings and lower interest rates.
Mislav Matejka, JPMorgan’s head of global and European equity strategy, said the optimism is also underpinned by resilient growth, cooling inflation and wagers that the surge in AI stocks reflects a potential economic transformation — not a bubble that will burst.
“If the economy is weaker than we project, the equity market may not necessarily take it negatively,” he said. “It’ll rely on the Fed to do the heavy lifting.”
While there are no doomsday predictions for U.S. equities next year, Bank of America Corp.’s Savita Subramanian is among the few advocating some caution.
She says the benchmark will rise to 7,100 in 2026, limited by lofty valuations. But the breadth of her bull-and-bear scenarios reflect the degree of uncertainty. She says a recession could send stocks tumbling 20%. On the other hand, she sees the possibility that significantly higher-than-expected earnings could push them up as much as 25%.
For now, strategists seem to be leaning into a lesson learned the hard way over the past few years: Don’t underestimate the strength of the U.S. stock market.
The fundamentals are supporting that view. The U.S. economy expanded in the third quarter at the fastest pace in two years, bolstered by resilient consumer and business spending and calmer trade policies. And corporate America is projected to post double-digit earnings growth again.
“Just because the year is changing, you don’t change your views,” said Manish Kabra, head of U.S. equity strategy at Societe Generale SA.
“The profit outlook is strong and broadening beyond tech,” he said, while also flagging the economic stimulus from the Fed’s rate cuts and Trump’s tax-cut bill. “The macro setup is simply solid.”
With assistance from Matt Turner
