JPMorgan updates stock market outlook for 2026

Core Viewpoint - JPMorgan Chase anticipates that retail investors will continue to drive stock purchases, maintaining momentum into 2026, despite warnings from institutional investors about potential market bubbles [1][5][6]. Retail Investor Activity - Retail investors have demonstrated strong momentum, investing nearly $160 billion into stock-based ETFs in September and October [1][5]. - The pace of stock inflows is the fastest since the post-election surge of late last year, with individual investors seemingly unconcerned about warnings from hedge funds and pension managers regarding market valuations [2][5]. Market Trends - Retail investors are actively buying on dips and pursuing gains, contributing to a sustained market rally [3][5]. - Historical trends suggest that December and the first quarter typically see above-average ETF and retail flows, supporting the expectation of continued investment enthusiasm [6]. ETF Inflows - U.S.-listed ETFs experienced record inflows of $175.6 billion in October, with September also seeing significant inflows of $141.2 billion [7]. - Year-to-date ETF inflows surpassed $1 trillion by mid-October, with projections indicating a potential $1.4 trillion for 2025 [7]. Institutional Investor Sentiment - Despite the retail investment surge, institutional investors remain cautious, with some fund managers opting to move to the sidelines [8].