Will the stock market continue to rise in 2026?

Introduction

Will the stock market continue to rise is one of the most searched questions among investors and savers. This article explains what that question means for major U.S. indices (S&P 500, Nasdaq-100), summarizes the dominant drivers behind recent gains, lays out analyst forecasts (as of late 2025), identifies the principal risks, and lists measurable indicators investors watch. Readers will gain a clearer framework for monitoring markets and practical, neutral ideas for positioning — including how Bitget services (spot trading, derivatives, and Bitget Wallet) may support diversified portfolios.

Will the stock market continue to rise?

Executive summary / short answer

Many market strategists and major banks saw room for further gains into 2026, citing supportive liquidity, resilient corporate earnings, and concentrated tech/AI leadership. However, those gains were described as conditional. Key contingencies include the Federal Reserve's path on rates and cuts, inflation trends, earnings revisions, and market breadth. Risk scenarios (sticky inflation, policy surprises, valuation contraction, or geopolitical shocks) could reverse gains quickly. As of December 2025, strategist surveys and bank outlooks showed a wide dispersion of targets and an emphasis that outcomes depend on macro and earnings data (Sources: CNBC Market Strategist Survey; Business Insider compilation of Wall Street forecasts).

Historical context and recent performance

From 2023 through much of 2025 U.S. equity markets experienced a strong multi-year rally. Major indices recorded notable gains as inflation cooled from 2022 peaks and real yields declined. In 2025 the S&P 500 produced substantial year-to-date returns, while the Nasdaq-100 outpaced broader indices driven by mega-cap technology and AI-related names.

As of December 2025, cumulative multi-year returns (2023–2025) set a high base: many large-cap growth names had appreciated sharply, pushing index-level valuations above historical averages. The market also saw episodic volatility in 2025 — including a mid‑year drawdown tied to tariff uncertainty and risk‑off flows, followed by a rebound as policy expectations softened and earnings surprises supported momentum. These moves framed 2026 expectations in most strategist reports (Sources: CNBC, Fortune, Barron's).

Primary drivers of continued market gains

Monetary policy and interest rates

The Federal Reserve’s policy path is the dominant near-term driver for risk assets. Lower policy rates or credible expectations of cuts reduce discount rates used to value future corporate cash flows, lifting price-to-earnings multiples and supporting risk-taking.

As of December 2025, many market participants were pricing a series of Fed rate cuts in 2026, though timing and magnitude varied across futures and strategist models. If the Fed eases sooner or more aggressively than priced in, equities could rally further. Conversely, if inflation prints higher-than-expected and the Fed delays easing or tightens again, equity multiples could compress and trigger downside (Sources: CNBC Pro, U.S. Bank commentary).

Key mechanisms:

• Lower real yields increase the present value of future earnings, favoring growth stocks.
• Easier policy can boost credit availability and corporate spending, improving sentiment and cyclical earnings.
• Policy communications shape market volatility; surprises often provoke sharp re-pricing.

Corporate earnings and margins

Sustainable market gains require either rising earnings per share (EPS) or rising valuation multiples. Many strategist forecasts for 2026 assumed continued earnings growth, helped by technological productivity gains, margin expansion in select sectors (advertising platforms, cloud, AI infrastructure), and buybacks.

Examples from late 2025 corporate data (reported by major outlets):

• Select ad-platform companies reported strong top-line growth (e.g., Meta-like ad momentum and AppLovin-like results in 2025), supporting earnings beats.
• Large retailers pivoting into advertising (e.g., Walmart-style ad growth) improved margin narratives by turning low-margin retail sales into higher-margin ad revenue streams.
• Chipmakers and AI-infrastructure suppliers (e.g., TSM-like beneficiaries) saw robust demand tied to data center capex.

Analyst earnings revisions — upward or downward — were a key near-term signal. Broad upward revisions can sustain rallies; downward revisions often presage corrections (Sources: Business Insider, Motley Fool reporting on corporate earnings trends).

Technology, AI adoption and sector leadership

AI investment has concentrated gains in large-cap technology names. The AI capex cycle (data center buildouts, specialized silicon, cloud services) drove outsized revenue and margin upside in 2025 for many suppliers and platforms.

Bull case points:

• Large incumbents with integrated AI stacks (search + cloud + hardware) can monetize AI features broadly across products, increasing monetizable impressions and ad revenue.
• Semiconductor foundries and chip designers benefit from multi-year capex cycles as hyperscalers expand compute capacity.

Risks inside this driver include concentration risk (market gains narrowing to a handful of names) and the emergence of alternative architectures that reshape vendor economics. Coverage by outlets in late 2025 emphasized both the growth potential and the valuation sensitivity of AI leaders (Sources: Business Insider, Tech industry coverage).

Liquidity, flows and investor behavior

Market moves are increasingly driven by capital flows: ETF inflows, passive fund allocations, retail participation, and margin activity. In 2025, robust retail brokerage activity and margin borrowing increased participation, particularly in tech and growth names (reported brokerage account growth and margin loan increases were cited for Interactive Brokers‑like firms).

Important dynamics:

• Net inflows into equities via ETFs can raise index levels independent of uniform earnings gains.
• Concentrated fund flows into mega‑cap tech reduce market breadth and increase vulnerability to shocks.
• Retail participation and margin use can amplify downside during rapid deleveraging episodes.

Fiscal policy and regulatory environment

Fiscal measures — tax changes, stimulus, or regulatory shifts — can materially affect corporate profits and investor sentiment. Ahead of U.S. elections and as legislators debate tax and spending plans, market participants priced potential fiscal tailwinds or headwinds into projections. Regulatory decisions affecting tech, advertising, or trade (tariffs) also weighed on sector outlooks in 2025 and informed 2026 scenarios (Source: Fortune, Barron's coverage).

Analyst forecasts and consensus outlook

Major Wall Street forecasts in late 2025 and into 2026 showed a range of outcomes. Summaries from strategist surveys and bank notes indicated:

• Many banks and strategists projected further gains for 2026, sometimes double-digit for the S&P 500 if the Fed cut and earnings held up (Sources: CNBC Market Strategist Survey; Business Insider summary of Wall Street predictions).
• Other institutions urged caution, arguing much of the upside was already priced in and that crackdowns in breadth or unexpected macro data could create sizable downside (Source: Morgan Stanley commentary).
• Barron's and Fortune pieces highlighted AI and corporate buybacks as central bullish narratives, but both noted valuation sensitivity.

Dispersion in targets reflected different assumptions about the Fed’s timing of cuts, inflation trajectory, and corporate margin behavior. That divergence underscores forecasting uncertainty: small changes in macro inputs generate materially different index outcomes.

Key risks and counterarguments

Valuation risk and bubble concerns

Elevated index valuations — particularly when concentrated in a few mega-cap names — increase downside sensitivity. Historical episodes show that when a narrow group of stocks drives index performance, a shock to that group can create broad drawdowns even when the median company’s fundamentals are unchanged.

Metrics to watch: P/E ratios, forward P/E, CAPE, and valuation dispersion across sectors.

Inflationary pressures and policy surprises

If inflation re-accelerates or proves stickier than expected, the Fed could delay easing or resume tightening, compressing multiples. Key inflation inputs include services inflation, wage growth, and shelter costs. Unexpected CPI/PCE prints have historically triggered equity repricing.

Trade policy, tariffs and political risk

Trade frictions or tariff announcements can disrupt supply chains and corporate margins, particularly for manufacturers and firms dependent on international supply. Policy‑driven uncertainty can reduce capital spending and forward guidance visibility.

Sector or factor rotation and market breadth deterioration

A robust rise in a few sectors (AI, semiconductors, ad tech) with weak breadth masks underlying fragility. Rotation away from narrow leaders into value, cyclicals, or small caps could stall headline gains.

External shocks and systemic risks

Geopolitical events, major cybersecurity incidents, or financial-sector stress (credit tightening, bank failures) can catalyze rapid market repricing. While such shocks are hard to forecast, they remain plausible tail risks.

Interaction with cryptocurrencies and risk assets

Crypto and equities have shown episodic correlation. Crypto drawdowns have sometimes coincided with risk-off moves in equities, as derivative deleveraging and liquidation flows cross markets. However, crypto remains a distinct asset class driven by network activity, on-chain metrics, and regulatory developments.

As of late 2025, episodes where bitcoin sold off amplified risk-off sentiment were documented, but crypto was not the primary driver of U.S. corporate earnings or the macro outlook. For investors who use both equities and crypto, Bitget’s services (spot trading and derivatives) plus Bitget Wallet can help manage exposure and custody across asset types while emphasizing risk management and diversification.

Scenario analysis (next 12–24 months)

Below are three condensed scenarios commonly used by strategists to communicate possible market paths.

Bull case

• Fed begins cuts earlier than expectations; inflation moderates and real yields drop.
• Corporate earnings grow faster than current consensus driven by AI monetization and margin expansion.
• Liquidity remains supportive and breadth improves as more sectors participate.
• Market implication: double-digit gains for major indexes; reduced volatility.

Base case

• Gradual Fed easing (timed and sized close to futures pricing); earnings grow modestly in line with forecasts.
• Tech/AI leadership remains but breadth slowly recovers.
• Market implication: moderate positive returns (mid-single to low‑double digits) with occasional volatility around macro prints.

Bear case

• Inflation surprises higher or growth slows (stagflation or earnings downgrades); Fed delays cuts or tightens.
• Earnings revisions turn negative and valuation multiples compress.
• Market implication: correction or bear market risk, significant volatility, concentration-driven drawdowns.

All scenarios highlight that the market’s path is conditional; small changes in macro or earnings inputs shift probabilities materially.

Indicators and metrics to watch

Investors and strategists commonly monitor the following measurable indicators:

• Fed funds futures and the Federal Reserve dot plot — market-implied rate expectations.
• CPI and PCE inflation prints (month-over-month and year-over-year) — inflation direction.
• Employment data (nonfarm payrolls, unemployment rate, wages) and GDP growth — macro growth backdrop.
• Corporate earnings revisions and aggregate EPS surprises — forward earnings momentum.
• Buyback activity and share issuance — supply/demand for float.
• Valuation measures: trailing and forward P/E, CAPE, sector P/E dispersion.
• Market breadth: advance/decline line, number of new highs vs. new lows.
• Credit spreads (investment-grade and high-yield) — risk appetite and financial conditions.
• ETF and mutual fund flows — liquidity into/out of equities.
• Broker-dealer margin loan levels and retail account growth — leverage sensitivity.

Watching how these indicators move together provides better context than any single metric alone.

Investment implications and common strategies

All content below is educational and descriptive, not investment advice.

Long-term investors

For long-horizon investors, the focus is often on diversification, disciplined asset allocation, and rebalancing. Long-term portfolios can benefit from: sector diversification, dollar-cost averaging, and maintaining appropriate equity allocation aligned with goals and risk tolerance. Diversifying across market-cap, geography, and asset classes (including fixed income and selected crypto exposures held in secure custody such as Bitget Wallet) helps manage idiosyncratic shocks.

Tactical / shorter-term approaches

Active managers may emphasize sector or factor tilts (quality, low volatility, value vs. growth), thematic exposures (AI infrastructure, cloud, advertising platforms), and risk-management tools (put hedges, options collars). Tactical positions often rely on near-term macro views and are monitored actively.

Role of cash and fixed income

Holding cash or quality short-duration bonds provides optionality: if markets decline, investors can deploy cash into cheaper assets. Short-duration bonds and high-quality money-market instruments can act as a defensive allocation during periods of high uncertainty.

Forecasting limitations and methodological notes

Market forecasting is inherently uncertain. Model outputs depend heavily on macro assumptions (inflation path, growth, policy), and small changes can produce large index differences. Forecasts also face limitations such as data revisions, behavioral responses to surprises, and structural market changes (e.g., ETF dominance, passive flows). Consensus forecasts frequently change as new data arrives; investors should treat forecasts as conditional scenarios rather than certainties.

Frequently cited expert views (selected excerpts)

• As of December 2025, CNBC’s Market Strategist Survey and related coverage summarized that many strategists saw room for 2026 gains if Fed cuts and earnings growth materialized, but emphasized the conditional nature of those gains (Source: CNBC Market Strategist Survey).
• Business Insider’s compilation of Wall Street forecasts highlighted variation across banks — some projecting double-digit upside in 2026 under optimistic Fed/earnings scenarios, others warning that much upside was priced in (Source: Business Insider).
• Morgan Stanley and similar houses cautioned that optimism was front-loaded, stressing the need for breadth improvement and earnings confirmation before repeating earlier gains (Source: Morgan Stanley research commentary).
• Barron's and Fortune noted AI as a central growth narrative, with both praise for AI-driven earnings growth and caution about valuation concentration (Sources: Barron's; Fortune).
• Motley Fool and U.S. Bank commentary emphasized the decisive role of inflation and the Fed’s path in shaping whether gains can continue into 2026 (Sources: Motley Fool; U.S. Bank).

Chronology of major market-moving events referenced (timeline)

• Early 2025: Continued rally from 2023–2024 momentum as inflation eased and yields fell.
• Mid 2025: Tariff-related headlines caused a drawdown and volatility spike; markets later recovered as clarity and policy guidance eased.
• Mid–late 2025: Strong corporate earnings in select tech, ad‑tech, and semiconductor supply chains supported a renewed rally.
• Fall 2025: Fed meetings and inflation prints produced episodic volatility; futures pricing of rate cuts adjusted multiple times through the year.
• December 2025: Strategist surveys and bank 2026 outlooks published, offering divergent index targets and highlighting scenario dependence (Sources: CNBC, Business Insider, Morgan Stanley).

See also

• S&P 500 index
• Federal Reserve and monetary policy
• Market valuation metrics (P/E, CAPE)
• Equity factor investing (value, growth, quality)
• Bitcoin and macro correlations
• Bitget Wallet and custody solutions

References and further reading

• CNBC: Wall Street's official 2026 stock market outlook — CNBC Market Strategist Survey (As of December 2025).
• Business Insider: 2026 stock market predictions from Wall Street banks (As of late 2025).
• Morgan Stanley: Market commentary and 2026 cautionary notes (As of December 2025).
• Fortune: Analyst surveys and 2026 outlook coverage (As of December 2025).
• Barron's: Market outlook pieces on how the rally can continue and what to buy (As of late 2025).
• Motley Fool: Articles on Fed news and implications for investor strategy (As of 2025).
• U.S. Bank: Commentary on potential corrections and macro risks (As of 2025).
• Selected corporate reporting and market data referenced in text (company earnings and metrics quoted are as reported in Q3/Q4 2025 filings and widely covered in market press).

(All source mentions above are paraphrased summaries used for context. As of the dates cited, those outlets published strategist surveys and bank forecasts that informed the synthesized outlook in this article.)

Practical next steps and how Bitget can help

For readers seeking tools to manage multi-asset portfolios or to explore exposure to crypto and related digital assets, Bitget offers spot and derivatives trading and Bitget Wallet for custody and on‑chain interactions. These tools can complement equity allocations for investors who want to maintain diversified exposure across liquid markets. Always consider risk tolerance, time horizon, and the non‑correlated nature of different asset classes.

Explore Bitget’s educational resources, Bitget Wallet for secure custody, and spot/derivatives products to implement tactical exposures while maintaining appropriate risk management.

Further exploration

• Monitor the indicators listed in this article weekly.
• Track corporate earnings revisions for your major holdings.
• Use margin and leverage cautiously; elevated market concentration increases downside risk.

更多实用建议：立即了解更多Bitget功能，或在Bitget Wallet中管理数字资产以实现跨市场的多元化策略。