Overview
- Major houses cluster year-end S&P 500 targets between roughly 7,100 and 8,100, reflecting conditional optimism rather than firm consensus.
- Fed funds futures imply at least two more rate cuts in 2026, a backdrop investors view as supportive if growth cools without slipping into recession.
- Consensus forecasts call for about 15% S&P 500 earnings growth, with gains expected to broaden beyond mega-cap tech as stretched valuations limit multiple expansion.
- AI remains the central investment thesis, with hyperscaler capex projected to top $500 billion, even as questions grow over the durability and payback of that spending.
- Risk flags are rising across the street, from valuation and a vulnerable labor market to potential 2026 curveballs outlined by Morgan Stanley on productivity, stock–bond dynamics and commodities.