The Stock Market May Do Something Shocking in 2026, According to Wall Street Analysts

Group 1 - The S&P 500 has increased by 17% this year, positioning it for its third consecutive year of double-digit gains despite a crash following tariff announcements in April [1] - S&P 500 companies have reported double-digit earnings growth for three consecutive quarters, with earnings expected to rise by 14% in 2026, up from 11% in 2025 [3][4] - The current forward price-to-earnings (PE) multiple for the S&P 500 is 22.7, significantly above the five-year average of 19.9 and the ten-year average of 18.6, indicating elevated valuations [5] Group 2 - Evercore analyst Julian Emanuel projects a base-case scenario where the S&P 500 reaches 7,750 in 2026, suggesting nearly 13% upside from the current level of 6,875 [6] - Emanuel estimates a 25% chance that the S&P 500 could surge to 9,000 in 2026, representing a 30% upside, contingent on factors such as artificial intelligence advancements and potential Federal Reserve interest rate cuts [7] - The median forecast indicates the S&P 500 will reach 7,560 within 12 months, implying about 10% upside, while Morgan Stanley's bear-case scenario predicts a decline to 4,900, indicating a 30% downside [8]