can the stock market continue to rise — 2026 outlook

Can the stock market continue to rise?

This article examines the question "can the stock market continue to rise" across short‑ and multi‑year horizons, summarizes the 2023–2025 rally, reviews the fundamental and technical drivers that could support more gains, catalogs principal risks, summarizes institutional outlooks (Dec 2025), and lists measurable indicators investors can watch. The goal is neutral, evidence‑based context — not investment advice.

Introduction and scope

When readers ask "can the stock market continue to rise", they are typically referring to broad U.S. equity benchmarks such as the S&P 500, Nasdaq Composite and large‑cap sectors that led the multi‑year advance. This article treats the question at two time horizons: (1) the near term (weeks to 12 months) and (2) the multi‑year or secular horizon (several years). Answering whether "can the stock market continue to rise" requires assessing corporate earnings trends, central‑bank policy, market breadth, liquidity and investor flows.

As of Dec 30, 2025, according to CNBC, many strategists were "upbeat" about continued growth into 2026, while other major institutions cautioned that gains would be conditional on earnings, rate expectations and breadth. This article synthesizes institutional commentary and market data through December 2025 to frame scenarios for the next 12–24 months.

Recent market context (2023–2025)

Can the stock market continue to rise after the 2023–2025 run? To judge that, first consider how the rally behaved: from the 2022 lows through 2025, major U.S. indices delivered multi‑year gains characterized by strong performance from a small group of mega‑cap technology companies, widespread investor focus on artificial intelligence (AI), and elevated valuations relative to medium‑term averages.

• As of Dec 23, 2025, some market reports noted the S&P 500 had gained roughly 17% year‑to‑date for 2025, marking a third consecutive year of double‑digit returns for the index.
• The rally showed pronounced concentration: a handful of large tech companies (often termed the leading megacaps) accounted for a large share of index returns, while equal‑weighted indices and small‑cap indices lagged.
• The AI investment narrative — heavy capex for data centers and chips — supported above‑average revenue and profit growth for firms exposed to AI infrastructure.

Institutional research published in Dec 2025 (Fidelity, Morgan Stanley, J.P. Morgan, Charles Schwab and others) underscored this mix: strong earnings momentum and AI adoption versus higher valuations and potential breadth limitations.

Fundamental drivers that can support further gains

When asking "can the stock market continue to rise", investors should evaluate structural and cyclical fundamental drivers. The main supportive factors include corporate earnings, monetary policy, technology/capex cycles, fiscal liquidity and investor flows.

Corporate earnings growth

Earnings are the primary long‑run determinant of equity prices. If analyst consensus and company guidance show accelerating revenue and margin expansion, equity valuations can be sustained or re‑rated upward. Several institutions in Dec 2025 cited consensus forecasts of continued earnings growth into 2026, particularly for technology and AI‑beneficiary firms. Strong earnings revisions and positive guidance tend to validate continued market advances.

Monetary policy and interest rates

Central‑bank policy materially affects discount rates and risk premia. Lower nominal and real yields typically support higher price/earnings multiples. As of mid‑December 2025, many market participants were watching the Federal Reserve’s messaging: if rate cuts arrive gradually and yield curves ease, liquidity conditions could remain permissive and risk assets could continue to climb. Conversely, surprises toward tighter policy would weigh on valuations.

Technological catalysts (AI and productivity)

The AI capex cycle has been an important growth accelerator. Large‑scale investments in AI infrastructure (GPUs, data centers, software) have boosted revenue for related hardware and cloud providers and created durable secular tailwinds for productivity gains in some industries. Institutional notes in Dec 2025 emphasized that sustained AI monetization and higher corporate capex could underpin multi‑year equity gains.

Fiscal policy and liquidity

Fiscal deficits, corporate tax policy and direct government spending influence aggregate demand and liquidity. While fiscal tightening would be a headwind, measured fiscal support or expansion (or reduced uncertainty around fiscal policy) can provide an additional cushion for equity markets.

Investor flows and sentiment

Net flows into equity ETFs, mutual funds and retirement accounts matter for market liquidity and price direction. In 2024–2025, large inflows into passive equity ETFs and thematic funds (AI‑related exposures) helped fuel index gains. Continued positive flows, especially from institutional allocators, can sustain rallies beyond what fundamentals alone would justify.

Market structure and technical / market‑breadth considerations

A clear answer to "can the stock market continue to rise" must include market internals: valuations, breadth, concentration and technical indicators.

Valuation metrics

Common measures include forward P/E, cyclically adjusted P/E (CAPE), price‑to‑sales and enterprise value multiples. By late 2025, forward P/E for major indices exceeded 5‑ and 10‑year averages in many cases. Elevated valuations imply that future returns depend more on earnings upside or multiple expansion than on cheap entry multiples.

Market breadth and concentration

A rally led by a narrow set of mega‑caps can leave the market vulnerable if leadership falters. Breadth indicators — such as the ratio of advancing to declining issues, equal‑weight vs cap‑weight index performance, and new 52‑week highs — signal whether gains are broad‑based or narrowly concentrated. Many institutions warned in Dec 2025 that breadth improvement would be necessary for a durable, multi‑year advance.

Technical indicators and cycle analysis

Technicals (moving averages, momentum, trend strength, volatility regimes) provide timing and confirmation signals for near‑term moves. Historical secular comparisons (e.g., the late‑1990s tech cycle) are used cautiously to illustrate re‑rating dynamics and the risks of late‑cycle valuation peaks.

Key risks and headwinds to continued gains

Even with supportive drivers, several risk categories could halt or reverse gains. When assessing "can the stock market continue to rise", consider these primary headwinds.

Inflation persistence and monetary surprises

Sticky inflation that forces the Fed to maintain higher rates or re‑tighten would raise discount rates and compress equity multiples. Unexpected inflation metrics or hawkish central‑bank communications are common triggers for corrections.

Policy, geopolitics and trade disruptions

Trade friction, sanctions, or major policy shocks can raise input costs and disrupt supply chains. While political events per se are not the article’s focus, policy uncertainty that materially affects corporate margins and capital spending can be a meaningful risk to market stability.

Earnings disappointments and margin pressure

A sharp deceleration of revenue growth, margin compression (from wage or input cost inflation), or disappointing corporate guidance could undermine the valuation foundation supporting the rally.

Market concentration and re‑rating vulnerability

Heavy reliance on a handful of large stocks raises systemic vulnerability: idiosyncratic weakness in one or more leaders can lead to outsized index declines even if the broader economic picture is stable.

Liquidity shocks and investor deleveraging

Rapid outflows, forced selling by leveraged players, or a spike in volatility can produce liquidity squeezes and swift, non‑linear price drops.

Institutional outlooks and consensus (Dec 2025 summary)

Below are summarized, neutral takes from major institutional and media sources through Dec 2025, used to frame near‑term expectations. These are conditional views — not recommendations — and were published in Dec 2025 unless noted.

• CNBC (Dec 30, 2025): Many market strategists expressed optimism for continued growth into 2026, emphasizing earnings resilience and AI momentum, but noted that gains are contingent on macro‑data and Fed policy.
• Fidelity (Dec 17, 2025): Fidelity’s 2026 outlook highlighted valuation risks but identified room to run given earnings growth, breadth trends, and AI‑driven capex; they emphasized diversification and monitoring breadth.
• Barron's (Dec 12, 2025): Barron's noted conditions under which the rally could persist and listed investment themes to consider if the bull market continues.
• Morgan Stanley (Dec 17, 2025): Morgan Stanley outlined a constructive case but warned of valuation and liquidity risks that could tame the bull market in 2026.
• Charles Schwab (Dec 9, 2025): Schwab stressed macro uncertainty and sector rotation risks despite positive earnings dynamics.
• J.P. Morgan Global Research (Dec 9, 2025): J.P. Morgan presented scenario analysis with base‑case modest gains, upside tied to productivity gains and rate easing, and downside linked to policy surprises.
• Motley Fool (Dec 18, 2025) and U.S. Bank (Dec 9, 2025): Both publications discussed whether the market could continue to climb through 2026 and highlighted valuation considerations and potential correction catalysts.

These institutional notes generally converge on a conditional view: the market can continue to rise if earnings growth and liquidity remain supportive, but elevated valuations and narrow breadth increase the odds of interim volatility or correction.

Possible scenarios for the next 12–24 months

Answering "can the stock market continue to rise" is best done by mapping plausible scenarios.

Base case — continued modest gains

• Drivers: steady corporate earnings growth, inflation gradually moderates, Fed moves toward easing or maintains accommodative posture, and breadth slowly improves.
• Outcome: S&P 500 posts modest positive returns (single‑digit to low‑teens percentage range), with periodic pullbacks and sector rotation.

Bull case — sustained rally

• Drivers: stronger‑than‑expected productivity gains from AI, rapid earnings upgrades, decisive cuts in real yields, and broadening investor participation beyond megacaps.
• Outcome: above‑consensus returns (double digits), valuation expansion on stronger fundamentals, and narrower implied volatility.

Bear / correction case

• Triggers: persistent inflation forcing tighter policy, significant earnings downgrades, liquidity shock or rapid investor deleveraging, or major geopolitical events that materially disrupt trade and supply chains.
• Outcome: a meaningful correction (10%+ drawdown or worse), sectoral stress, and potential recessionary tailwinds that pressure cyclicals.

What indicators investors should watch

To evaluate whether "can the stock market continue to rise" in real time, monitor these measurable indicators:

1. S&P 500 earnings revisions (net changes in analyst EPS estimates): divergence between upward/downward revisions signals direction for stock prices.
2. CPI and PCE inflation prints (monthly levels and 3‑/6‑month trends): inform Fed policy path.
3. Fed funds futures and dot‑plot signals: market‑implied probabilities for rate cuts or hikes.
4. 10‑year Treasury real yields and term premium: influence equity discount rates.
5. Market breadth metrics (advance/decline line, percentage of stocks above 50‑day MA, equal‑weight vs cap‑weight performance).
6. Credit spreads (investment grade and high yield): widening indicates stress and risk‑off flows.
7. Equity fund and ETF flows (net inflows/outflows weekly/monthly): measure demand for risk assets.
8. Tech and AI capex indicators (server orders, GPU shipments, corporate capex surveys): gauge sustainability of the AI cycle.
9. Volatility regime (VIX level and skew): low VIX with divergent breadth can warn of latent fragility.
10. Corporate guidance and buyback activity: conservative guidance or reduced buybacks can dampen market support.

Each indicator should be evaluated in combination rather than isolation; the interplay between earnings momentum and rate expectations is often decisive.

Investment implications and strategies (neutral, non‑prescriptive)

This section outlines general, neutral considerations for different investor types given the question "can the stock market continue to rise".

Asset allocation and diversification

• Diversify across sectors and geographies to reduce concentration risk from narrow leadership.
• Consider blending growth and quality value exposures to balance sensitivity to rate moves and earnings cycles.

Active vs passive positioning

• Passive strategies efficiently capture market returns but concentrate risk in mega‑caps when indices are top‑heavy.
• Active managers can add value via sector rotation, quality screening and managing exposure to richly valued names.

Risk management (position sizing, hedges, cash)

• Maintain appropriate position sizing relative to risk tolerance and investment horizon.
• Use rebalancing to harvest gains and buy weakness; consider options hedges or volatility‑aware tactics for shorter‑term protection.
• Holding defensive cash or liquid alternatives provides optionality to buy into corrections.

Time horizon and investor type considerations

• Long‑term investors should focus on asset allocation and not attempt timing short‑term market moves.
• Near‑term traders must monitor technicals and macro releases closely and use stop‑loss and size controls.
• Retirees may prioritize income and capital preservation while still capturing some equity upside through diversified, lower‑volatility allocations.

All of the above are general considerations and not personalized investment advice.

Historical precedents and long‑term perspective

Long secular bull markets have varied in duration and composition. Examples often referenced include the 1990s tech‑led run and post‑2009 expansion. Key lessons:

• Secular rallies can persist longer than many expect if earnings catch up to valuations.
• Narrow, sentiment‑driven rallies have historically been more vulnerable to sharp corrections.
• Valuation extremes (e.g., CAPE near dot‑com highs) raise long‑term return uncertainty but do not predict timing precisely.

Institutional research in 2025 compared present conditions to prior episodes while emphasizing differences (AI as a distinct productivity catalyst, different monetary backdrop), underscoring the limits of direct historical analogs.

Criticisms and alternative viewpoints

While many institutions saw room for more gains in late 2025, skeptical perspectives stressed the following:

• Elevated valuations and CAPE metrics suggest limited multi‑year upside absent sizable earnings expansion.
• Structural inflation or higher secular real yields would be a persistent headwind.
• Heavy concentration in technology makes the index sensitive to a rotation away from growth and toward cyclical or value sectors.

Those alternative views underscore the conditional nature of any bullish claims that answer "can the stock market continue to rise".

Frequently asked questions (short answers)

Q: Is now a good time to buy? A: That depends on your time horizon, risk tolerance and portfolio allocation. Evaluate fundamentals and maintain diversification; this is informational, not investment advice.

Q: How long can the bull market last? A: Secular rallies can last several years if earnings and liquidity remain supportive. Elevated valuations increase the risk of corrections, so outcomes are uncertain and conditional.

Q: Should I reduce equity exposure? A: Allocation decisions should align with personal goals and risk tolerance. Rebalancing to target allocations is a common risk management practice.

Practical note on crypto market linkage (context only)

Some market participants draw links between broad equity strength and cryptocurrencies. For example, observers noted that Bitcoin’s price action in 2025 sometimes tracked risk‑asset sentiment, with crypto volatility influenced by liquidity and risk appetite. If discussing crypto exposures, consider custodial and trading options such as Bitget for exchange services and the Bitget Wallet for custody — mentioned here only for product awareness and not as a recommendation.

As of early 2025, market commentary highlighted that crypto moves could reflect both crypto‑specific flows (long‑term holder selling) and broader liquidity conditions that also affect equities. Investors should treat crypto and equities as distinct asset classes with different risk profiles.

See also

• S&P 500
• Market breadth
• Price‑earnings ratio (P/E)
• Central bank policy
• Equity valuation metrics
• AI in markets

References and further reading (titles, outlets, dates)

• "Can the Stock Market Keep Climbing in 2026?" — Motley Fool (Dec 18, 2025).
• "'We're pretty upbeat': Stock market experts expect continued growth" — CNBC (Dec 30, 2025).
• "2026 stock market outlook" — Fidelity (Dec 17, 2025).
• "How the Stock Market’s Rally Can Keep Going in 2026—and What to Buy Now" — Barron's (Dec 12, 2025).
• "Will 2026 Tame the Bull Market?" — Morgan Stanley (Dec 17, 2025).
• "2026 Outlook: U.S. Stocks and Economy" — Charles Schwab (Dec 9, 2025).
• "Why the bullish market may have years to run" — Fidelity consumer/institutional pieces (Oct / Sep 2025).
• "Is a Market Correction Coming?" — U.S. Bank (Dec 9, 2025).
• "2026 Market Outlook" — J.P. Morgan Global Research (Dec 9, 2025).

(Note: Sources are listed for attribution. All institutional forecasts cited were conditional at the time of publication.)

Further reading and next steps

If you want ongoing, timely market updates, monitor the indicators listed earlier and track institutional outlooks as macro data arrives. For readers interested in crypto‑asset context or custodial solutions referenced above, explore Bitget’s trading platform and Bitget Wallet features to learn about custody, security and supported asset types.

To follow market news and professional research, consult primary institutional reports and verify data dates when forming viewpoints. The answers to "can the stock market continue to rise" will change with incoming inflation, earnings and policy data — so stay informed and align decisions with your long‑term plan.