Equity strategists expect stocks to rise further

Equity strategists of US banks and investment houses agree that the US stock market will continue to rise in 2026. This is expected despite the fact that it has been a particularly busy investment year and the risks in the stock market have not eased at all.

If the forecasts are correct, at the end of the year the US stock market would have the longest bullish period since the financial crisis of the late 2000s. This would be the fourth consecutive year of growth.

The S&P 500 stock index, which tracks large companies, has risen 90 percent since October 2022, driven by the artificial intelligence boom.

Among the 21 stock market experts interviewed by the news agency Bloomberg, there was not a single one who expected the market to fall. The average increase expectation for the S&P 500 stock index is nine percent. This year, the S&P 500 has risen almost 18 percent.

There are many risks

Despite the optimism, forecasts can go badly wrong, as a number of big risks are lurking in the market. The most obvious of these is the end of the AI ​​boom and the collapse of the market out of disappointment. The US economy and the central bank Fed’s interest rate decisions bring their own tension.

The president cannot be underestimated either Donald Trump’s possible unexpected surprises for the economy caused by the decisions. Last spring, Trump’s customs decisions caused a sharp fall in the stock market. However, since then, the stock market has recovered to new records.

The risks for the stock market are not simple. A declining economy does not automatically mean bad for stocks, as lower interest rates may follow. Trump has shown that the state of the stock market is important to him, so the policy should also take into account the mood of the stock market.

The rise in company share prices is supported by strong earnings improvements, but they are mainly dependent on technology companies. More broadly, the profit growth of companies could be supported by Trump’s tax cuts for next year.

Predictions live according to the situation

When looking at the forecasts for the coming year, it is good to remember the impact of the roughly 20 percent price drop in the spring on analysts as well. According to Bloomberg, during the price drop, forecasts fell at the fastest pace since the start of the coronavirus pandemic. When the price rise continued again, the forecasts were pumped up again.

The average expectation of analysts collected by Bloomberg is that the S&P 500 will be at 7,555 points at the end of next year. Last Friday, the stock index ended at 6,929 points. The index’s all-time record of 6,932 points was set on Christmas Eve.

Predictions range from 8100 to 7000 points. The lowest forecast is given by an independent investment bank Stifel Nicolauksen particle strategist Barry Bannister. The investment bank gives the highest forecast Oppenheimer John Stoltzfus.

Equity strategist Ed the Zarardin expectations are that the S&P 500 will rise 11 percent to 7,700 points during the year. According to Yarden, the pessimists have been wrong so often in recent years that investors have grown tired of the same song about falling stock markets.