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Much to the surprise of many investors, 2025 may turn out to be another great year for the US equity markets. That would buck the likelihood that the S&P 500 Index (SPX) would not score a “three-peat,” or a third successive double-digit gain. Naturally, investors wonder if 2026 will see a fourth year of double-digit gains. Here’s my take, writes Sam Stovall, chief investment strategist at CFRA Research.

Year-to-date through Nov. 21, the S&P 500 rose more than 12%, even after declining by 19% early in the year on fears of a recession from a possible global trade war. The S&P 500’s gain was driven by the Federal Reserve restarting its rate-reduction cycle plus better-than-expected earnings gains, led by Artificial Intelligence (AI)-related companies.

S&P 500 Index (SPX) Chart
 

Both benchmark styles advanced, along with 10 of the 11 sectors in the S&P Composite 1,500. Markets were led by communication services, information technology, and utilities; laggards included consumer discretionary, consumer staples, and real estate. In addition, 53% of the 155 subindustries rose in price, led by diversified metals and mining, gold, and electronic components.

Even though we think the bull will remain intact by year-end 2026, we project increased volatility along with a lower-than-average full-year percentage increase. Our 2026 year-end target for the S&P 500 is 7,400, implying a 5.7% price increase on top of the projected advance to 7,000 by year-end 2025.

Our hypothetical moderate allocation consists of 45% US equities, 15% international stocks, 20% bonds, 5% commodities, and 15% cash.

About the Author

As chief investment strategist, Sam Stovall serves as analyst, publisher, and communicator of CFRA's outlooks for the economy, market, and sectors. He focuses on market history and valuations, as well as industry momentum strategies.

Mr. Stovall is the author of The Seven Rules of Wall Street and writes weekly Sector Watch and Investment Policy Committee meeting notes on CFRA's MarketScope Advisor platform. His work is also found in CFRA's flagship weekly newsletter The Outlook.

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