Bull market faith at full throttle! Wall Street unanimously betting on US stocks rising for four consecutive years. The AI boom, loose monetary policy, and economic resilience will be the biggest driving forces.

In large banks and boutique investment firms, there is an optimistic consensus that the US stock market will continue to rise for the fourth consecutive year in 2026, marking the longest continuous upward trend in almost twenty years. However, despite the nearly 90% increase in the S&P 500 index since its low point in October 2022, the market is not without anxiety. Reasons for concern include the possibility of the AI boom turning into a bust, economic conditions and the Federal Reserve's interest rate decisions falling short of expectations, and unexpected shocks that President Trump's second year in office may bring. Nevertheless, the strong rise in US stocks over the past three years has debunked all bearish predictions. In this context, sell-side strategists have almost unanimously turned optimistic. Analysts surveyed by the media have predicted a median year-end target for the S&P 500 index in 2026, showing about 9% upside potential. Out of the 21 analysts interviewed, none predicted that the S&P 500 index would fall next year. Veteran market strategist and long-term bull on US stocks Ed Yardeni said, "The pessimists have been wrong for too long, people are getting tired of that narrative." He predicts the S&P 500 index will close at 7700 points next year, which represents an 11% increase from last Friday's closing price. However, even he finds this unquestionable optimism somewhat concerning. He added, "This is where my inner contrarian instinct kicks in: things have been going according to my expectations for too long, to the point where everyone turning optimistic seems a bit worrisome. Pessimism is no longer in vogue." Institutional optimism for US stocks in 2026 This Wall Street optimism has been reinforced by this year's dramatic market volatility. At the beginning of 2025, the "Low-Cost AI Shock" brought by DeepSeek to big tech valuations and the sell-off triggered by Trump's trade policies once threatened the optimistic targets of strategists. As the S&P 500 index fell by nearly 20% from mid-February to early April, approaching bear market territory, strategists quickly lowered their forecasts for the index at the fastest rate since the Great Depression. But they had to raise them again, as the stock market staged one of the fastest rebounds since the 1950s. This further prolonged the frustrating period for market "soothsayers" since the Great Depression. Despite Trump's tariff policies impacting the global economic system that had supported the economy for decades, the US economy has shown remarkable resilience. The massive investments in artificial intelligence, flowing into data center construction and high-performance chips, continue to boost the stock prices of the big five tech giants, which have contributed to nearly half of the S&P 500's gains this year. Strategists drastically lowered year-end expectations for the S&P 500 index in May and quickly rebounded in the fall Chief Investment Strategist at Piper Sandler, Michael Kantrowitz said, "It's tricky because I think there's been a lot of uncertainty over the past five years, particularly this year." He has given up making year-end point forecasts for the S&P 500 index because "in highly uncertain environments, investors become very short-sighted, react quickly to various data points, and there are not many triggers needed to change opinions and market consensus." If Wall Street forecasters are correct about 2026, US stocks will experience the longest annual rise since the eve of the global financial crisis. If the highest target is achieved, it will also mark the first time in decades that the S&P 500 index has seen four consecutive years of double-digit gains. The highest target on Wall Street suggests the S&P 500 index will achieve double-digit gains for the fourth consecutive year This year, Christopher Harvey, a senior strategist who transferred from Wells Fargo Securities to Scotiabank Capital Markets, is one of the few analysts who have maintained their original forecast amid the year-long turbulence. He previously predicted the S&P 500 index would close at 7,007 points at the end of the year, whereas the index closed on Friday at around 6,930 points, just 1% lower than his forecast. Christopher Harvey currently predicts the S&P 500 index will reach 7,450 points by the end of 2026, representing an approximately 8% increase. However, he also warned that "many macro risks are being overlooked by the market," including the possibility that the Fed may keep rates unchanged for longer than traders currently expect; the US may raise tariffs on Canada or Mexico; and after a period of strong performance, corporate executives may try to lower profit expectations. He said, "These factors could start to create some turbulence." Like almost everyone else, analysts at J.P. Morgan were surprised by the market turbulence that swept the stock market early this year. In April, as Trump's trade war rocked the market, they abandoned their optimistic outlook for 2025 and became the most pessimistic strategists, predicting the S&P 500 index would fall by 12% in 2025. By June, the bank had abandoned its pessimistic stance and instead predicted a small increase. But even so, this outlook seemed overly conservative, as the S&P 500 index ultimately rose by nearly 18% this year. For 2026, J.P. Morgan has completely abandoned its cautious stance and expects the S&P 500 index to rise to 7,500 points driven by robust corporate earnings and lower interest rates. Mislav Matejka, head of global and European equity strategy at J.P. Morgan, said this optimism is based on the resilience of economic growth, cooling inflation, and the surge in AI stocks reflecting a potential economic transformation rather than an impending burst bubble. He said, "If the economy turns out weaker than we forecasted, the stock market may not necessarily react negatively. The market will expect the Fed to play a major support role." Although there are no doomsday-style forecasts for US stocks next year, Savita Subramanian of Bank of America remains one of the few strategists calling for a degree of caution. She expects the S&P 500 index to rise to 7,100 points in 2026, but high valuations will limit the upside. However, the range of her bullish and bearish scenarios is very wide, reflecting the level of uncertainty. She believes that if there is a recession, the stock market may fall by 20%; on the other hand, if corporate earnings significantly exceed expectations, the stock market could rise by as much as 25%. Importantly, Wall Street strategists seem to be learning a lesson from the past few years at a high cost - not to underestimate the resilience of US stocks. The fundamentals support this view. The US economy achieved its fastest growth in two years in the third quarter, benefiting from resilient consumer and business spending, as well as a more stable trade policy. At the same time, US companies are expected to achieve double-digit earnings growth once again. Manish Kabra, head of US stock strategy at the French Industrial Bank, said, "Don't change your views just because the year is changing. Profit outlook is strong, and is expanding from the tech sector into broader areas." He also mentioned the economic stimulus brought by Fed rate cuts and Trump's tax cuts, saying, "The overall macro environment is quite solid."