Three Wall Street brokerages came out with their stock market outlooks for the new year, and they all share the same bullish message: Strong gains are ahead. Oppenheimer is forecasting the S & P 500 will rally to 8,100 by the end of 2026, suggesting 18% upside from Friday’s close. Wolfe Research expects the benchmark index to rise to 7,600, implying an 11% gain. UBS predicts the S & P will jump to 7,500, equal to a 9% advance. Stocks are closing out a third straight strong year in a bull market that began in late 2022. The S & P 500 has rallied nearly 17% since the beginning of 2025 and recently traded near all-time highs , even as the tariff tensions that roiled markets earlier this year play out in the Supreme Court. Easier monetary policy and an artificial intelligence-driven bull market have fueled the advance. Over the past two years, companies linked to the AI trade have accounted for about 75% of returns in the S & P 500, J.P. Morgan Asset Management analysts told clients in a note dated in September. That trend has shown no sign of fading, despite growing concerns of an AI bubble . Easier money The Federal Reserve’s interest rate cuts in September and October, and the near-universal expectation that another will come Wednesday, have also helped stocks by easing corporate borrowing costs and supporting lofty stock valuations. The Fed’s move to lower rates one of the leading catalysts for the S & P 500, according to Oppenheimer. “At the core of what lies ahead for our 2026 target price to be achieved lies monetary policy, fiscal policy and the continuing progress of innovation and corporate earnings growth, all of which have been supportive of stock prices and are key to growing earnings and revenues in the year ahead,” Oppenheimer market strategist John Stoltzfus wrote Monday in a note to clients. Further brightening the outlook is that the Fed will “make at least one or two additional trims to its benchmark next year if inflation remains contained,” the strategist said. Fat profits Fatter corporate profits are also likely to push shares higher, particularly as AI titans continue to ramp up their dealmaking , according to UBS. UBS forecasts roughly 14% earnings growth next year, with nearly half of that coming from “Tech+” sectors with deepening ties to AI, the bank’s analyst wrote to clients. And with the growing integration of AI at companies across industries, the broader stock market is poised to score further near-term gains, UBS said. “Adoption is accelerating across every major sector, and while the direct P & L impact is still emerging, the breadth of use cases, scale of investment, and early operational wins suggest AI will be a key differentiator for U.S. companies over the next cycle,” UBS strategist Sean Simonds wrote Monday. “We see more productivity driven growth from AI adoption leading to earnings breadth improvement in 2H ’26 and ’27.” Moreover, improved consumer sentiment might prove a third leg for the market to stand on. “Consumer Discretionary faces weak regime signals and fragile consumer confidence, though sentiment is improving,” Simonds wrote. That’s the view at Wolfe, too, which said consumer spending will continue to be robust next year even as manufacturers start showing signs of weakness. “With the rise in stocks over the past several years disproportionately impacting the high-end over the low-end consumer, we believe spending is likely to continue,” Wolfe said in a report Monday. The average estimate among strategists on Wall Street is that the S & P 500 will reach something around 7,618 by the end of 2026, according to a regular CNBC Pro survey.
