When 2025 began, Wall Street was awash in excitement. A new President was about to take office  — even if he’d been in the office once before. Most investment professionals expected interest rates to come down. That tax cuts were on the way was judged a certainty. Regulation might be reduced substantially.

And what Wall Street certainly saw was a continuation of the 2024 bull market.

What could possibly go wrong?

Well, there was Donald Trump’s decision in early April to impose massive tariffs on just about everything and everyone. The Administration’s focus was on remaking the country into a standalone entity on the world stage, beholden to — and dependent on — no one. The federal government was ripped apart. ICE began collecting and deporting people illegally living in the United States, adding stress and angst to the collective mindset.

And, yet, the economy seemed to grow. Interest rates have come down. And stocks, God bless ’em, recovered from April’s panic slump and have largely moved higher.

Wall Street firms are resetting their S&P 500 targets for 2026.

CHARLY TRIBALLEAU/GETTY IMAGES.

A surprising bullish finish to 2025

After Friday’s close, the Standard & Poor’s 500 Index was up 17.8% for the year and up 43.3% since the April lows. Barring a crash between now and Dec. 31, the gain will be the third straight year of double-digit gains, something that hasn’t happened since 2019 to 2021.

Related: Analyst who predicted record gold prices resets target

A giddy period of five straight gains of 10% or more between 1995 and 1999 ended with a thud when the dot-com bubble burst.

All 11 sectors of the index are up for the year, as of Dec. 26, even real estate, which has struggled with high interest rates and huge problems in office and commercial markets. (The sector doesn’t include any home builders.)

The top performing sectors:

  • Communications Services (think Meta Platforms and Google parent Alphabet), up 32.7%.
  • Technology (including Nvidia, Microsoft Apple, and Palantir), up 25.3%.
  • Industrials (including Boeing, GE Aerospace, GE Vernova, Caterpillar and Huntington Ingalls), up 19.3%.
  • Financials (JP Morgan Chase, Bank of America, Morgan Stanley, BlackRock), up 15.1%
  • Health Care (CVS, Cardinal Health, Johnson & Johnson, Ely Lilly), up 13.4%, and 15.2% in the fourth quarter.

What analysts expect will drive the S&P 500 in 2026

Wall Street’s general bullishness throughout 2025 is alive and well going into 2026.

Based on the S&P 500‘s Dec. 22 close of 6,878.49, the average of projections from strategists is that the index will rise 10.2%. But, as usual, projections of the 22 firms we obtained vary widely and are not guaranteed.

More Wall Street:

  • Goldman Sachs issues urgent take on stock market for 2026
  • Analyst who nailed 2023 bull run sets S&P 500 target for 2026
  • Longtime fund manager sends blunt message on P/E ratios
  • Nasdaq’s near 24-hour trading plan sparks Wall Street backlash
  • Analysis: Why ‘cheap stocks to buy now’ is the wrong investing idea

Oppenheimer is most bullish, seeing the index rising 17.8% to 8,100. The lowest estimate was 7,100, a 3.2% gain, from Ned Davis Research.

Powering the 2026 market, so they say, will be technology, artificial intelligence and finance. Precious metals producers saw their shares jump in 2025 and will go into next year with many, many fans.

The forces that many believe will power the markets:

  • Artificial intelligence and the gargantuan amounts of capital now being poured into data centers and chip and technology manufacturing.
  • Cash available for new investment from the huge tax refunds the government expects to send out next year.
  • The prospect of trillion-dollar valuations in initial public offerings from SpaceXand OpenAI.
  • More deregulation, particularly on environmental rules and the financial sector.
  • Higher precious metals prices: a function of the dollar’s 9.8% decline in 2025 and skepticism the federal government can gain control of its deficits. Macro Risk Advisors’ John Kolovos told CNBC he thinks gold will hit $5,000, possibly as high as $7,000. (For those interested, the dollar has fallen 21.5% since its all-time high in January 1986.)
  • Lower interest rates, as a new Federal Reserve chairman succeeds Jerome Powell. The top candidates believe interest rates can and should move lower. And, if they waver, President Trump will weigh in with loud demands for immediate rate cuts. (“The next Fed chair will only get the job by having precommitted to lowering interest rates. That doesn’t fit most definitions of independence,” Wall Street Journal columnist Greg Ip noted on, well, Christmas Eve.)

That’s the theory for 2026. It’s hard to argue with it except that the S&P 500 rarely produces four straight annual gains on price level alone. The last time was 2003 to 2007. At which point, stocks and, more importantly, the global financial system had both risen beyond parabolic, resulting in a near depression in 2008 and 2009.

Not everyone agrees.

What to watch out for in the market

The risks, such as the dot-com bust and the Great Recession, still loom today. You can see them in the startling rise of gold and silver prices and the related stocks or metals and precious metals producers, and, of course, the Magnificent 7 tech-related stocks.

Silver is up more than160% in 2025. Gold is up 72.4%. Their relative strength levels are around 90, a textbook definition of an overbought condition, noted a market follower on X  who goes by the handle the Great Martis. The writer’s conclusion: “This does not end well.” (The post was duplicated on Doug Kass’ Daily Diary on theStreet Pro.

You can also see the risk in the performance of Oracle shares. From a low on April 7, Oracle jumped 197%, peaking at $345.72. The shares have dropped to $197.99, down 42.7% after investors began to challenge Oracle’s expansion financing plans.

The big challenge for AI companies is how to make it profitable in 2026 and beyond.

Major analysts set S&P 500 targets for 2026

Below are the projections for some of the most important firms on Wall Street.

The highest projection is that the S&P 500 ends the year at 8,100, from Oppenheimer & Co., typically one of the most bullish firms on the Street.

Related: Longtime analyst resets Nvidia stock price target ahead of 2026

The lowest gain comes from Ned Davis Research, up about 3% at 7,000. Ed Clissold, chief U.S. Strategist, told CNBC he worries the investors are on a sugar high that can leave stocks vulnerable if something bad happens.

Plus, he warns the Federal Reserve Board will get a new chairman after Jerome Powell’s term expires in May. Changing Fed leadership often produces choppy markets, including declines in the first months of the new chairman’s tenure.

“Usually the market struggles in the first six months of a new Fed Chair, with an average correction of about 15%,” said Clissold.

Also, a note on potential valuation risk: The Shiller S&P 500 Price-to-Earnings (P/E) Ratio hit its second-highest level ever on Dec. 26 at 40.74. The average since 1871 is about 17. Plus the Buffett Indicator, which tracks the ratio of the total stock market value to annualized gross domestic product, suggests the stock market is strongly overvalued. Check out how the conclusion is reached here.

That said, the indicators’ levels are no guarantee of a crash. And Wall Street firms prefer bullish news.

Overall, 10 of the major research firms I surveyed expect the S&P 500 to return over 10%, including:

  • Goldman Sachs: 10.49%
  • Fundstrat: 11.94%
  • Morgan Stanley: 13.4%

S&P 500

History is mostly on their side. The S&P 500 has risen around 70% of the time since its earliest iteration in 1927, according to Macrotrends.net.

What you should do now:

  • If you have a financial advisor or are thinking about hiring one, by all means challenge their thinking for how they might react in down markets or up markets.

Related: Analyst who predicted Palantir rally picks top stock for 2026