Don't be scared by short-term fluctuations! Wall Street sends a "tranquilizer" to the market: corporate profits will support the rise of the US stocks next year.

Some Wall Street strategists have said that while the uncertainty about interest rates presents short-term risks, strong corporate earnings will continue to drive the US stock market higher in 2026. Michael Wilson of Morgan Stanley pointed out that there are clear signs of profit recovery currently, and US companies are gaining stronger pricing power. He also mentioned that profit expectations have bottomed out - this indicator reflects the number of analyst downward revisions compared to upward revisions in profit forecasts. Wilson wrote in his report, "Despite the recent pressure on stock prices from Federal Reserve guidance and government shutdown uncertainties, these are temporary obstacles, and the market will achieve robust performance in 2026 driven by profit growth." This year, the US stock market was shaken by escalating trade tensions and a prolonged government shutdown. Federal Reserve Chairman Powell's cautious statements on interest rates also dampened market sentiment, and the market's decline raised concerns about the valuation of AI bubbles. Nevertheless, this strategist remains one of the most steadfast bulls on Wall Street. With significant progress in the Senate towards reopening the government, US stock index futures rose across the board on Monday. Meanwhile, compilation data shows that this earnings season has far exceeded expectations, with S&P 500 index component companies seeing a nearly 15% year-on-year increase in third-quarter profits. Since 2025, the S&P 500 index has accumulated a 14% increase, and is poised to achieve its third consecutive year of gains. According to an index compiled by Citigroup, the number of analysts raising profit forecasts has exceeded the number lowering forecasts since mid-October. The market's focus is currently shifting to NVIDIA Corporation's earnings report next week, in search of trends in the artificial intelligence (AI) industry. John Stoltzfus, a strategist at Oppenheimer Asset Management, believes it is too early to be bearish on chip manufacturers and the AI industry. He said, "The current stock price pullback reflected in major indices appears more like a 'mild correction' rather than the start of a more severe downturn." Strategists at UBS Group AG predict that technology companies will once again lead the way in US corporate earnings growth next year. Overall, they forecast that the S&P 500 index will reach a historical new high of 7500 points by the end of 2026, representing over an 11% increase from current levels.