Key Takeaways
- Understand the key tailwinds shaping the market.
- Learn about potential investment risks.
- See what investors are watching in 2026.
- Learn how to build a resilient portfolio for the coming year.
Our investment outlook for 2026 anticipates three powerful forces impacting markets in the year ahead: expansive fiscal programs at the federal level, a decisive shift in monetary policy, and a surge in artificial intelligence (AI) investment. Our Market Outlook 2026 report calls for active investor participation given the underlying market momentum.
We expect the economy to grow near trend in 2026, supported by fiscal stimulus already made into law, continued rate cuts by the Federal Reserve, potential capitulation on some tariffs, and continued AI spending. There is no sign of a major slowdown.
Key Themes Shaping the Stock Market Outlook for 2026
The key themes shaping financial outlook for 2026 include three tailwinds:
- A continuing surge in AI investment that’s likely to persist as a major driver of economic growth into the near future.
- Deficit-financed stimulus, particularly from the One Big Beautiful Bill Act (OBBBA) of 2025—which includes retroactive tax cuts—can lead to large tax refunds in the first half of 2026.
- Accommodative monetary policy by the Fed as it enters an active rate-cutting cycle could eventually land rates around 3%.
What Investors Are Watching in 2026
The stock market forecast for the next six months has investors and wealth managers watching a number of key risk factors and opportunities.
Labor Market Dynamics
The greatest uncertainty in the outlook for the economy centers on a contradiction in the labor market: sluggish monthly payroll growth in sectors outside of healthcare alongside a historically low unemployment rate. The key question is whether today’s hiring weakness could evolve into rising layoffs and a significantly higher unemployment rate—conditions that may signal a recession.
Inflation and Federal Reserve Policy
There is risk that inflation could rise further from already elevated levels, fueled by tax cut-driven household spending. This scenario could prompt the Fed to scale back its expected path of rate cuts or adopt a more hawkish stance, potentially bringing the current expansion cycle to an end.
Global Economic Recovery
The rebound in economic activity across developed markets and emerging markets represents a significant tailwind for US companies, which means investors should remain poised for gains from a potential global economic recovery.
AI Boom Sustainability
The key questions in our market outlook focus on how long the historic surge in AI spending will last and how severe the fallout could be when the boom ends. History suggests there is potential for a bust driven by overcapacity, as seen with periods of aggressive investment in railroads and the internet.
Market Volatility
The 2026 stock market outlook shows potential for volatility, as midterm election years historically see the largest intra-year pullbacks. We anticipate as much as a 12% to 15% peak-to-trough market correction coming at some point during the year.
Why 2026 Could Be a Pivotal Year
2026 could be a pivotal one as historic growth drivers meet significant late-cycle risks, creating opportunity as well as potential for high volatility. In our opinion, a suitable strategy for many investors to combat market volatility is to “ride the wave” with a diversified portfolio, as the underlying market momentum supports another year of solid stock gains.
Inside the Full Market Outlook 2026 Report: What You’ll Learn
Explore our full Market Outlook 2026 report to learn more about the following:
- Key economic drivers in 2026
- The US economic forecast for the coming year
- Global economic updates for developed and emerging markets
- Potential impacts of AI investment scale
- Policy tailwinds to watch
- Equities outlook for 2026
- Bonds outlook for the coming year
- Recommendations on portfolio strategy
- Guidance on riding the wave of potential market volatility
Explore Our Market Outlook 2026 Report
Stay on top of the global investment outlook for 2026 and learn how to “ride the wave” of opportunities and risks in the coming year. Download our full Market Outlook 2026 report.
A diversified portfolio does not ensure a profit or protect against loss in a declining market.
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
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