No one is bearish! Wall Street unanimously expects US stocks to continue rising in 2026, but senior strategists are concerned about the consensus

Wall Street has formed a rare consensus of optimism: U.S. stocks are expected to rise for the fourth consecutive year in 2026, setting a record for the longest consecutive annual gains in nearly two decades.

On December 29, Bloomberg reported that after the S&P 500 index rebounded about 90% from its low in October 2022, sell-side strategists have almost completely abandoned their bearish stance. According to a Bloomberg survey, none of the 21 market forecasters interviewed predict a decline in the stock market next year. The average forecast from Wall Street implies that the S&P 500 index will rise another 9% in 2026.

Despite the unresolved risks of an artificial intelligence bubble, the direction of Federal Reserve policy, and uncertainties surrounding Trump's second term, Wall Street strategists have chosen to be collectively optimistic. If this extreme consensus expectation comes true, U.S. stocks will experience the longest annual rising cycle since the onset of the global financial crisis. If the most optimistic predictions are realized, the S&P 500 index will see its first consecutive four-year double-digit returns since the 1990s internet bubble.

Reports indicate that this unified optimism marks a complete turnaround for strategists after years of "failed predictions." Faced with the remarkable resilience shown by the stock market amid turmoil, previously bearish analysts (such as those from JP Morgan) have been forced to continually raise their expectations to catch up with the market's actual performance.

It is worth noting that while no strategists predict a major decline, some are still warning of risks. Veteran market strategist Ed Yardeni expects the S&P 500 index to close at 7,700 points next year, an 11% increase from last Friday's closing price. However, even this long-term bull is concerned about the lack of dissent: "The pessimists have been wrong for so long that people are tired of that narrative. But when everyone becomes optimistic, it makes me a bit worried."

Sell-Side Strategists Fully Turn Around

The long-term market rise has forced pessimists to "surrender," and the sharp shift in JP Morgan's stance is a typical representation of this trend.

The bank's analysts were extremely pessimistic at the beginning of 2025, once predicting a 12% decline in the stock market that year, but this was proven to be a misjudgment by the subsequent market rebound.

Now, JP Morgan has abandoned its cautious stance, expecting the S&P 500 index to rise to 7,500 points in 2026, driven by robust corporate earnings and low interest rates.

Mislav Matejka, JP Morgan's global and European equity strategy head, stated that the optimism is also based on resilient growth, cooling inflation, and the surge in AI stocks reflecting a potential economic transformation rather than an impending bubble.

"If the economy is weaker than we predict, the stock market may not view it negatively. The market will rely on the Federal Reserve to take on the heavy lifting."

Meanwhile, most strategists believe that the fundamentals are strong enough to support the continuation of the bull market Manish Kabra, the head of U.S. equity strategy at Societe Generale SA, pointed out that the macro environment remains solid. The U.S. economy expanded at its fastest pace in two years in the third quarter, thanks to resilient consumer and business spending. Additionally, the Federal Reserve's interest rate cuts and Trump's tax cuts are also seen as economic stimulants.

Manish Kabra stated:

"Just because the year changes doesn't mean you need to change your view; the earnings outlook is strong, and growth is expanding from tech stocks to broader areas."

Resilience After Turmoil

This broadly bullish sentiment has been reinforced after the market experienced significant volatility in 2025.

Reports indicate that at the beginning of 2025, the market faced a sell-off due to the potential challenges posed by DeepSeek to U.S. AI companies and the chaotic trade war initiated by Trump.

The S&P 500 index plummeted nearly 20% from mid-February to early April, sliding toward bear market territory. At that time, strategists downgraded their expectations at the fastest pace since the COVID-19 pandemic crash.

However, the stock market subsequently staged one of the fastest rebounds since the 1950s, forcing analysts to raise their target prices again.

Michael Kantrowitz, chief investment strategist at Piper Sandler & Co., stated that the uncertainty over the past five years has been extremely high, leading investors to become very short-sighted and sensitive to data, with shifts in consensus views often requiring very few triggering factors. Given this uncertainty, he has stopped publishing year-end target prices for the S&P 500 index.

A Few Cautious Voices

Although no strategists are predicting a major decline, some are still warning of risks.

Christopher Harvey of CIBC Capital Markets is one of the few strategists who remained bullish during the volatility of 2025 and accurately predicted it. He expects the S&P 500 index to close at 7,450 points in 2026 but also warns that the market may be overlooking numerous macro risks.

The risks pointed out by Harvey include: The Federal Reserve may keep interest rates unchanged longer than traders expect; the U.S. may push for tariffs on Canada or Mexico; and corporate executives may try to manage earnings expectations after experiencing a round of strong growth.

He believes these factors could begin to disrupt the market's balance.

Savita Subramanian of Bank of America holds a cautious stance due to valuation limits, giving a target price of 7,100 points.

Her forecast range reflects significant uncertainty: If a recession occurs, the stock market could plummet by 20%; but if earnings significantly exceed expectations, the stock market could also surge by 25%.