US Stocks in 2026: Still Climbing, But Can They Sustain This Pace?

After three strong years, Wall Street heads into 2026 expecting stocks to rise again, though with less agreement on how far the rally can stretch. The S&P 500 closed 2025 at 6,845 points, up more than 16% for the year after recovering from a near-19% drawdown in April. Forecasts for end-2026 range widely, from around 7,100, implying gains of roughly 4%, to as high as 8,000, which would mean an advance closer to 17%.

History suggests moderation. When the S&P 500 posts gains of 15% or more, the following year has averaged returns of about 8%, often with double-digit pullbacks along the way. In other words, upside may persist, but volatility rarely disappears. That was already evident in 2025, as markets digested tariff shocks, geopolitical risk, and repeated debates around Federal Reserve independence, all while pushing to nearly 40 new record highs.

Support for 2026 comes from expectations of Fed rate cuts, easing financial conditions, and resilient earnings growth. Inflation has cooled, bond yields have retreated from their highs, and corporate profits continue to surprise to the upside, particularly in technology and AI-linked sectors. At the same time, leadership has begun to broaden, with the Dow outperforming the Nasdaq late in the year, a sign the rally is spreading beyond megacap tech.

What Does This Mean for Me?

Still, valuations are elevated, borrowing costs remain historically high, and policy risks linger. With gold posting its strongest annual performance since 1979, markets are clearly hedging against uncertainty. For 2026, the base case remains positive, but returns may look more like steady grinding gains than the explosive runs of recent years.