POLL-S&P 500 to rise another 12% by end of 2026, extending strong run

By Caroline Valetkevitch

NEW YORK, Nov 26 (Reuters) - The benchmark S&P 500 U.S. stock index is forecast to rise about 12% between now and the end of next year, propelled by a still-healthy economy, strength in technology-related companies and an accommodative Federal Reserve, according to a Reuters poll of equity strategists.

The S&P 500 .SPX will end 2026 at 7,490, or 11.7% above current levels, according to the median estimate of more than 45 strategists, analysts and portfolio managers polled November 14-25.

The index ended Monday at 6,705.12. It remains up 14% for 2025 but is off about 3% from its late October all-time high after a recent selloff. If stocks end higher in 2025, next year would be a fourth straight year of gains for the benchmark.

Many strategists think gains in technology -- and especially artificial-intelligence-related companies -- will continue to power the market higher despite recent worries about an AI bubble.

"The sectors that have actually been the only ones to have outperformed the S&P since the bull market started in October 2022 - very AI-centric and info tech - will continue to lead the market higher," said Julian Emanuel, senior managing director, equity, derivatives and quantitative strategy at Evercore ISI in New York. Evercore has a year-end 2026 forecast for the S&P 500 of 7,750.

Even with its recent losses, AI leader Nvidia NVDA.O is up 36% so far in 2025. Shares of Advanced Micro Devices AMD.O are up 78% so far this year.

Lofty technology valuations and an exuberance over the AI trade had pressured stocks recently, with market valuations having neared their highest since the dot-com bubble 25 years ago, according to LSEG Datastream.

Eight of 14 respondents to an extra question said an S&P 500 correction in the coming three months was likely.

Analysts cited the potential for higher inflation and uncertainty over the interest rate cut outlook as risks to overall bullish forecasts.

"The biggest risk is that inflation rises more than we expect and sustains itself," said Brian Levitt, chief global market strategist for Invesco, which has a 7,500 year-end 2026 target for the S&P 500.
In such a scenario, "the market would have to price out the rate cuts and valuations would adjust."

But Levitt said he does not see that happening, and instead thinks the 7,500 forecast may end up being too low.

Stocks rallied on Monday after odds sharply increased that the Fed will lower interest rates again in December.

Uncertainty over the impact of President Donald Trump's tariffs on the economy will continue into 2026, and investors will be watching midterm elections a little less than a year from now that could change the leadership of Congress.

"From both a monetary and fiscal perspective, the powers that be in Washington are going to do everything that they can possibly do to make sure the economy and earnings are on solid footing prior to the midterms of next year," Emanuel said.

Third-quarter financial results on Wall Street have been much stronger than expected, with S&P 500 companies on track for a 14.7% year-over-year increase in earnings, according to LSEG. That compares with expectations of 8.8% earnings growth at the start of October.

S&P 500 earnings growth for all of 2025 is now estimated at 12.9%, led by gains in technology .SPLRCT earnings, and analysts expect year-over-year earnings growth of 14.3% in 2026, again led by technology.

The poll has the Dow Jones industrial average .DJI finishing next year at 50,566. The Dow closed at 46,448.27 on Monday.

(Other stories from the Q4 global Reuters stocks poll)