One of Wall Street’s most aggressive outlooks for 2026 is calling for another double digit year for US stocks. The S&P 500 is expected to climb to 8000 over the next year, which would imply roughly a 17 percent gain from year end levels and mark yet another record for the index.
That target stands out as one of the highest on the Street, built on the view that investors have consistently underestimated the strength of the US economy and its ability to absorb shocks.
The recession that never showed up
Since the tariff shock earlier this year briefly pushed stocks toward bear market territory, the economy has repeatedly refused to crack. Growth has stayed intact, consumer spending has held up, and recession fears have quietly faded from market conversations.
The logic is simple. Historically, sustained bear markets tend to coincide with recessions. Right now, recession risk is not front and center for investors, which keeps the foundation under equities relatively firm.
Earnings growth is finally spreading out
For the past two years, a handful of mega cap tech companies have done most of the heavy lifting for profits. At one point, fast growing tech stocks accounted for nearly 90 percent of S&P 500 earnings growth.
That dominance is starting to ease. In the most recent earnings season, tech’s share of profit growth fell meaningfully, not because Big Tech disappointed, but because the rest of the market surprised to the upside. Stronger earnings from non tech companies expanded the overall earnings pool and reduced reliance on the Magnificent 7.
Why that matters for 2026
A broader earnings base makes rallies more durable. Instead of markets relying on a small group of winners, growth is becoming more evenly distributed across sectors. If that trend continues, it supports the case for higher index levels without needing extreme valuation expansion.
In short, fewer cracks in the economy, improving profit breadth, and steady growth expectations are why some on Wall Street think another strong year for stocks is not just possible, but plausible.