As the year draws to a close, Wall Street analysts are rapidly preparing their stock market forecasts for 2026, with some firms already revealing their expectations. Morgan Stanley has asserted a robust bullish stance, predicting that the S&P 500 will soar to 7,800 within the next year. This projection represents an almost 16% increase from the recent closing value of 6,734.11. In the bank’s global strategy outlook, strategist Michael Wilson attributed this optimistic forecast to several key factors: a potential return of positive operating leverage, enhanced pricing power, efficiency gains driven by artificial intelligence, and favorable tax and regulatory policies that could facilitate a transition from public to private growth. Furthermore, Wilson noted that contained interest rates across the yield curve would add to this positive environment. For 2025, he has set a target for the S&P 500 at 6,500, a figure currently outpaced by present market levels.
In a similar vein, Sam Stovall from CFRA has signaled strong expectations for stock performance in the upcoming year as well, setting a year-end target for the S&P 500 at 7,400, indicating nearly 10% upside from its recent close. Stovall acknowledges the continuation of the bullish market but cautions that the momentum may slow due to increasing headwinds. He specifically pointed to historical trends during mid-term election years, which often introduce volatility and can impact price returns significantly. Since 1946, an average of four Senate seats and 27 House seats have changed hands during these mid-term years, suggesting potential challenges ahead. Stovall’s outlook for 2025 reflects a similar cautious stance, with a target of 6,525 that is also lower than current trading figures.
As these early forecasts begin to circulate, market watchers can expect a flurry of reports and analyses from various research firms and financial institutions in the weeks ahead, further shaping the conversation about the anticipated trajectory of the stock market.
