Wall Street Sees More Gains for S&P 500 but Flags AI, Inflation and Policy Risks

The S&P 500’s bull market entered a fourth year and Wall Street analysts expect another strong 2026, with FactSet’s aggregate price target at 7,968.78 — roughly a 16 percent rise from the index’s year-end close of 6,845.50. Forecasters point to a growing economy, rising corporate profits, resilient consumer spending and the prospect of Federal Reserve rate cuts as drivers of continued gains.

RBC Capital Markets’ base-case model projects the S&P 500 ending 2026 around 7,750, while LPL Financial’s base case is 7,300–7,400 and its bull case is 7,800. Analysts say policy will remain central to markets: last year’s tariff disruptions and this year’s domestic policy changes could boost corporate profits, and traders are watching a potential new Fed chair and early economic data, including the Jan.

9 jobs report, for clues about rate cuts. Still, risks persist. Sky-high valuations — especially among the so-called Magnificent Seven tied to the A.I. race — have investors wary. Strategists expect 2026 to be a “show-me” year for A.I., when investors will demand evidence that large investments translate into productivity and profits.

Macro concerns include a cooling labor market, stubborn inflation, rising commodity prices for metals such as copper and silver, a stronger 10-year Treasury yield and record investor margin debt (above $1.2 trillion in November). Those factors could amplify volatility and threaten leveraged positions.

Key Topics

AI, United States, Business, Markets, Stocks, Federal Reserve, Tariffs