Market Overview - The S&P 500 gained 16% last year, marking the third consecutive year of double-digit returns [1] - The index has started 2026 strongly, but indicators suggest a potential pullback may be imminent [1] Valuation Metrics - The S&P 500 has a forward price-to-earnings (P/E) multiple of 22, which is elevated compared to its five-year and ten-year averages, indicating a historically high valuation [3] - Historical comparisons show that similar high P/E multiples occurred during the dot-com bubble and the COVID-19 pandemic [4] Earnings Expectations - Rising forward valuation multiples may indicate that investor expectations are outpacing actual earnings growth, leading to a scenario where even positive earnings reports could disappoint [5][6] - A disconnect between market sentiment and business performance could trigger a sell-off, driven by valuation concerns rather than actual company performance [6] Shiller CAPE Ratio - The S&P 500 Shiller CAPE ratio is currently around 39, the highest since the dot-com bubble burst in early 2000, suggesting the market is expensive relative to long-term earnings [7][8] - Historical data indicates that periods of peak CAPE ratios often precede lower stock returns, as seen in the late 1920s and early 2000s [8] Investor Behavior - With the S&P 500 near all-time highs and elevated valuation metrics, investors are becoming cautious, stockpiling cash, and rotating capital away from speculative or momentum stocks [9]

Key Points The S&P 500 completed its third consecutive year of double-digit gains in 2025. This is the second-most expensive S&P 500 in history, based on the Shiller P/E ratio. Investors should use this time to ensure their portfolios are well-diversified. 10 stocks we like better than S&P 500 Index › Although the first few months of 2025 started off rocky for the stock market amid the Trump administration's tariff plan, the market made an impressive turnaround and finished the year strong. The ...

Key Points Donald Trump's first year was generally above average for the stock market investors. But the second year might be different. Some of the biggest risks for stock market investors have nothing to do with Trump's policies. Consumer spending, tariffs, and AI spending will all factor into how the market does in 2026. These 10 stocks could mint the next wave of millionaires › Generally, politics can cause short-term market movement, but doesn't have a significant impact on long-term stock m ...

pics five / Shutterstock.com Quick Read Capital One (COF) offers an 11-month CD paying 3.90%. PNC Financial Services (PNC) provides money market accounts yielding 3.15% monthly with daily liquidity. The dot-com crash in March 2000 took 13 years to fully recover. The 1929 crash required 25 years for the Dow to return to prior levels. Amazon Prime members: Do not miss this bonus While getting to retirement age can be a blessing and a curse, the reality of counting on the U.S. government to provide ...

Core Viewpoint - The stock market has experienced significant gains over the past three years, but concerns are rising about a potential market crash in 2026, primarily driven by inflation and rising bond yields rather than AI stocks [1][2]. Inflation Concerns - Inflation peaked around 9% in 2022, and despite the Federal Reserve's efforts, the latest Consumer Price Index (CPI) shows inflation at approximately 2.7%, still above the Fed's target of 2% [5]. - Many economists believe the actual inflation rate may be higher due to incomplete CPI reporting, which could lead to consumer perceptions of persistent high prices [6]. Federal Reserve's Dilemma - The Federal Reserve faces a challenging situation where lowering interest rates could support the labor market but risk increasing inflation, while raising rates could control inflation but harm employment and slow economic growth [7]. Bond Yields and Market Fragility - Higher inflation is likely to lead to increased bond yields, with the U.S. 10-year Treasury bill currently yielding around 4.12%. Yields approaching 4.5% or 5% could create market instability [8]. - Rising yields result in higher borrowing costs for consumers and the government, which can negatively impact stock valuations as the cost of capital increases [9][10]. Future Inflation Projections - Some Wall Street banks predict inflation will rise above 3% in 2026 before declining, with JPMorgan Chase forecasting 3% inflation peaking and Bank of America predicting a peak of 3.1% [11]. - If inflation peaks and shows signs of deceleration, the market may stabilize; however, high inflation can become entrenched, leading to persistent high prices that affect consumer behavior [12]. Market Timing Advisory - Predicting inflation trends in 2026 is uncertain, and attempting to time the market is discouraged. A sustained rise in inflation and yields could significantly impact market stability [13].

Key Points Metrics like the CAPE Ratio and Buffett Indicator point to stocks being very overvalued. However, history also shows stocks performing well after mid-term elections and bull markets last a long time. Whether the current AI infrastructure trend is cyclical or secular will play a big role in where stocks head over the next few years. 10 stocks we like better than S&P 500 Index › With the current bull market having entered its fourth year, there is growing chatter of an artificial intell ...

In this case, President Donald Trump's tariffs are the root cause of the division within the Federal Reserve. The combined baseline and reciprocal tariffs have raised the average tax on U.S. imports to its highest level since the 1930s, meaning there is essentially no historical data (at least not recent data) to guide policymakers.Multiple dissents are theoretically bad news for the stock market. If experts are divided on the appropriate monetary policy, it suggests that economic conditions are difficult t ...

Key Points There could be several headwinds pushing against the stock market next year. Now can be a pivotal time for investors to re-evaluate their portfolios. Pivoting into more modestly priced investments and ones that pay dividends can help reduce risk for investors. 10 stocks we like better than Schwab U.S. Dividend Equity ETF › If you're a retiree who's invested in the stock market, you may be worried about remaining invested in 2026. The S&P 500 has been hitting record highs this year, exp ...

Key Points More Americans are growing concerned about a potential recession in 2026. While it's impossible to know what's coming, now is a smart time to start preparing your portfolio. Sometimes, less is more when it comes to protecting your investments. 10 stocks we like better than Vanguard Total Stock Market ETF › This has been an unusual year for the stock market in many ways. After tumbling into correction territory earlier this year, the S&P 500 (SNPINDEX: ^GSPC) is now closing in on a new ...

Mind you, just because Powell has an in-depth understanding of the factors that influence the U.S. economy, it doesn't mean he can pinpoint directional moves in stocks. Back in December 1996, former Fed Chair Alan Greenspan delivered his now-famous "irrational exuberance" speech to describe a red-hot stock market fueled by internet mania, only to see stocks rally for more than three years following his speech.In September, while delivering a speech in Rhode Island, Federal Reserve Chair Jerome Powell weighe ...