Are stocks going to continue to go up? 2026

Are stocks going to continue to go up?

The question "are stocks going to continue to go up" is one of the most common investor queries in 2026. This article explains what that question means, summarizes the recent market run (2023–2026), and walks through the main drivers, risks, valuation signals and practical implications for investors. Readers will gain a structured framework to follow market signals and understand why different experts arrive at different short- and medium-term views.

As of Jan 14, 2026, Reuters reported renewed investor interest in biotech amid a lower-rate backdrop and a pipeline of delayed IPOs, illustrating how sector-specific dynamics can influence broader market sentiment. Source references from major firms (CNBC, Morgan Stanley, Fidelity, Charles Schwab, Kiplinger, Morningstar and U.S. Bank) are summarized where relevant. This article is informational and not investment advice.

Recent market context (2023–2026)

From late 2022 through 2026, U.S. equity markets experienced a sustained recovery and multi-year bull run marked by recurring all-time highs for major indexes. The S&P 500 repeatedly hit new records in 2024–2025, supported by a combination of corporate earnings recovery, multiple expansion in select sectors, and a rotation of risk-on leadership beneath the surface.

Key measurable points through late 2025 and early 2026:

• Market leadership concentrated: a small set of mega-cap technology and AI-related leaders accounted for a disproportionately large share of index gains.
• Sector rotations: consumer discretionary, healthcare and industrials showed notable strength in late 2025, while tech displayed periods of consolidation.
• Biotech rebound: as of Jan 14, 2026, Reuters reported that the SPDR S&P Biotech ETF finished 2025 up about 33%, reflecting renewed investor interest after a weak IPO year.
• IPO and capital markets: biotech IPO activity declined sharply in 2025 (10 IPOs) versus 2024 (26) and the 2021 peak (93), per Dealogic data reported by Reuters.

These data points show a market that has returned to risk appetite but with underlying structural differences from prior broad-based rallies. Investors and institutions increasingly watch earnings momentum, AI-driven capex, and central bank policy as primary inputs to forward expectations.

Major drivers that could sustain further gains

Corporate earnings growth

Corporate earnings are the primary long-term engine behind equity returns. If companies can deliver persistent revenue growth and stable or expanding profit margins, intrinsic equity values rise.

• Analyst EPS forecasts for 2026 remained a key input in institutional outlooks published in late 2025. Firms such as Morgan Stanley (Investment Outlook 2026, Nov 19, 2025) and Charles Schwab (Dec 9, 2025) highlighted the importance of earnings growth in underpinning further gains.
• Margin dynamics matter: rising margins from cost discipline, pricing power or productivity improvements can support multiple expansion even if top-line growth is modest.

Earnings revisions—upward or downward—tend to lead price trends. Watch guidance from major companies and aggregate revisions across sectors for early signals of durable momentum.

Technological investment (AI and related capex)

One of the defining investment themes of 2024–2026 is large-scale corporate spending on AI infrastructure, software and services.

• Structural capex: data-center expansion, specialized chips, and software investment can lift revenue for hardware, cloud and software vendors while lifting productivity across end markets.
• Expert optimism: as of Dec 30, 2025, CNBC summarized several experts who were upbeat about continued growth tied to AI through 2026, citing both demand and capital investment as drivers.

If AI capex maintains pace and begins to show measurable productivity or revenue impacts in corporate results, markets may reward those sectors with higher multiples. Conversely, a slowdown in AI spending would remove an important tailwind.

Monetary policy and interest rates

Central bank policy is a central determinant of equity valuations through discount rates and risk appetite.

• Rate path: the expectation for rate cuts, holds or further tightening affects the present value of future earnings. Many institutional outlooks in late 2025 and early 2026 assumed a gradual easing or stable stance compared to the high-rate peak of 2022–2023, supporting risk assets.
• Yield curve and credit spreads: narrowing credit spreads and a steeper monetary easing path typically correlate with improved market breadth.

Firms such as Fidelity (Dec 17, 2025) and Morgan Stanley (Nov 19, 2025) emphasized the sensitivity of equity returns to the timing and magnitude of Fed moves. If inflation proves sticky and rate cuts are delayed, valuations could be pressured.

Fiscal policy and regulation

Government spending, tax policy and regulation affect corporate profitability and investor sentiment.

• Fiscal stimulus or sector-specific incentives (e.g., semiconductor or clean-energy credits) can lift earnings in targeted industries.
• Regulatory clarity or disruptive regulatory changes (for healthcare, biotech, tech platforms) can quickly alter sector valuations and IPO activity.

For example, improved clarity around U.S. healthcare policy helped reduce headline risk for biotech companies according to Reuters (Jan 14, 2026), which fed back into investor willingness to re-engage with late-stage biotech IPOs.

Risks and headwinds to continued upside

AI disappointment or slowing capex

High expectations for AI create vulnerability to disappointment. If corporate AI spending slows or early AI projects fail to yield commercial results, growth-sensitive stocks could be re-priced lower.

Sticky inflation and monetary uncertainty

If inflation remains above central bank targets, policymakers may delay or reduce rate cuts, keeping real yields higher and pressuring price/earnings multiples.

Narrow market breadth and concentration

Market gains concentrated in a few mega-cap names increase systemic sensitivity. A pullback in leadership names can produce outsized volatility and reduce index gains even if many stocks remain steady.

Geopolitical, trade, and tariff risks

Trade policy changes, tariffs and geopolitical frictions can raise input costs or disrupt supply chains, affecting margins and guidance for multinational companies.

Labor market and consumer demand deterioration

A weaker labor market or rapid consumer pullback would reduce services and retail demand, pressuring revenue and earnings across cyclical sectors.

Valuation and market structure considerations

Valuations (P/E, price/fair value assessments)

Valuation metrics such as trailing and forward P/E ratios, price-to-sales, and enterprise value multiples help contextualize current prices relative to historical norms.

• Market-level P/E may appear elevated when a few high-growth names trade at very rich multiples.
• Equal-weighted indexes often trade cheaper than cap-weighted indexes when concentration is high. That divergence can signal either risk in the leaders or opportunity in underowned segments.

Institutional outlooks in late 2025 noted that while headline valuations were not extreme on some measures, the distribution of valuations across stocks warranted caution.

Sector and style dispersion (growth vs value, large vs small caps)

Performance over 2024–2026 showed style dispersion:

• Growth and mega-cap tech outperformance at times, driven by AI narratives.
• Periodic rotational opportunities in small-cap and value stocks when cyclical data improved.

Morningstar reports (Dec 3, 2025; Jan 13, 2026) and other market commentary suggested selective opportunities in small-cap and value stocks as potential complement to a growth-heavy core allocation.

Index dynamics and mechanical inflows

Index inclusions, ETF flows and passive rebalancing can create meaningful short-term buying or selling pressure. For instance, additions to the S&P 500 often lead to immediate buying; CNBC (Jan 16, 2026) noted that stocks typically rally after being added to the S&P 500 due to forced flows from index-tracking funds.

Mechanical flows matter for short-term liquidity and can temporarily distort price discovery.

Leading indicators and signals to watch

Macro indicators (GDP, inflation, employment)

Monitor core macro data that drive central bank decisions:

• Real GDP growth and ISM/manufacturing services surveys.
• Core inflation measures (PCE, CPI excluding food & energy).
• Employment reports (nonfarm payrolls, unemployment rate, wage growth).

Shifts in these series tend to lead changes in policy expectations and risk appetite.

Corporate metrics (earnings revisions, guidance, margins)

Key corporate signals include:

• Net upward or downward revisions to consensus EPS.
• Frequency of positive/negative guidance from large-cap firms.
• Trends in operating margins and free cash flow generation.

Earnings momentum across a broad swath of companies is more supportive of sustained market gains than momentum concentrated in a few names.

Market internals (breadth, credit spreads, volatility)

Market internals often give early warning:

• Breadth: the ratio of advancing to declining issues and the performance divergence between cap-weighted and equal-weighted indexes.
• Credit conditions: high-yield spreads and investment-grade spreads indicate risk tolerance.
• Volatility: VIX spikes can presage short-term corrections.

Capital expenditure and AI spending data

Track capex reports, semiconductor equipment orders, cloud infrastructure spending, and corporate guidance specifically mentioning AI projects. These concrete data points indicate whether the AI investment cycle is translating into durable demand for suppliers and service providers.

Expert and institutional outlooks (summary of 2025–2026 views)

Institutional views in late 2025 and early 2026 showed a mix of bullish and cautious perspectives:

• Optimism tied to earnings and AI: Morgan Stanley (Investment Outlook 2026, Nov 19, 2025), Kiplinger (Dec 29, 2025) and select CNBC coverage (Dec 30, 2025) highlighted reasons to remain constructive, citing earnings support and AI-related investment as a durable growth vector.
• Cautious notes: Fidelity (Dec 17, 2025) and Charles Schwab (Dec 9, 2025) emphasized valuation sensitivity and the risk of policy-driven volatility.
• Tactical picks: Morningstar (Dec 3, 2025; Jan 13, 2026) published specific stock ideas and sectors to watch in early 2026, balancing growth exposure with defensive tilts where valuation risk is high.
• Macro cautions: U.S. Bank (Jan 7, 2026) explored the potential for corrections if growth and policy expectations diverged materially.

Overall, the consensus leaned toward being "still bullish" or cautiously optimistic, conditioned on earnings delivery and the policy path.

Investment implications and strategies

This section outlines neutral, informational considerations investors often use to translate market outlooks into portfolio choices.

Risk management and diversification

• Diversification across sectors and market-cap ranges reduces single-point-of-failure risk.
• Rebalancing maintains target risk exposures and captures discipline during volatile markets.

Tactical positioning (overweight/underweight guidance)

• Institutional tacticians in late 2025 often recommended overweighting U.S. equities relative to international markets when the U.S. earnings outlook was stronger, but many emphasized sector selection over blanket bets.
• Consider balancing growth exposure (AI, software) with value or cyclical exposures that could benefit in a normalization of rates.

Time-horizon considerations (short-term trading vs long-term investing)

• Short-term market timing carries execution and behavioral risk. Historical data show that missing a few of the best return days materially reduces long-term performance.
• For long-term investors, consistent contributions and a focus on fundamentals (earnings and valuation) remain core principles.

Defensive and alternative hedges

• Defensive allocations: high-quality bonds, short-duration fixed income or cash buffers provide downside liquidity if volatility rises.
• Alternatives: managed futures, long/short strategies, or hedging via options can be used by sophisticated investors to manage tail risk.

Note: the above summarizes common approaches discussed by market commentators and institutions; it is informational and not investment advice.

Historical performance and statistical context

Putting the present in context helps set realistic expectations:

• Stocks historically produce positive calendar-year returns the majority of years; long-term averages for the S&P 500 are often cited in the mid-to-high single digits annually when dividends are reinvested.
• After multi-year rallies, markets have experienced both continued gains and periodic corrections. Statistical probabilities vary across market regimes, so interpreting history requires attention to current macro and earnings fundamentals.

One historically referenced pattern is the "first five days" rule: when the first five trading days of January are strongly positive, the year has often followed with above-average returns. Benzinga-sourced analysis (data through 2025) reported that when the first five days posted gains over 1%, the S&P 500 had a positive full-year return in roughly 87% of those cases historically. Such indicators are probabilistic, not deterministic.

Frequently asked questions (FAQ)

Q: Can stocks go up indefinitely?

A: No. Stock prices reflect discounted expectations of future earnings and cash flows. Over long periods, fundamentals change and periodic corrections occur. Sustained rises require either earnings growth, multiple expansion or both.

Q: How important are Fed rate cuts to continued stock gains?

A: Fed rate cuts can lower discount rates and boost risk appetite, which often helps equities. However, the market also prices in expected economic outcomes; cuts accompanied by weakening growth can be a mixed signal.

Q: Should I chase recent winners?

A: Chasing winners can expose investors to valuation risk and sharper drawdowns if leadership reverses. A disciplined framework—diversification, rebalancing and attention to fundamentals—reduces such risk.

Q: What role does AI play in whether stocks keep rising?

A: AI is a material thematic driver for specific sectors. If AI investments translate into measurable revenue and margin improvements, related stocks may see sustained gains. If AI fails to deliver broad commercial benefits, valuations could repricing.

Case studies / near-term scenarios

Base case (continued moderate gains)

Description: Earnings growth broadly meets expectations, policy remains accommodative or neutral, and AI capex continues at a steady pace. Market returns are modestly positive (single- to low-double-digit annual returns) with manageable volatility.

Signals consistent with this case: steady upward earnings revisions, improving breadth, narrowing credit spreads, and gradual rate easings.

Bull case (AI-led acceleration)

Description: Breakthroughs in AI adoption produce faster-than-expected revenue and margin gains across multiple sectors. Capital spending surges, corporate guidance improves, and multiple expansion accelerates, producing outsized market returns.

Signals consistent with this case: strong capex data, broad-based earnings upgrades, and sustained leadership breadth across sectors.

Bear/correction case (policy or earnings shock)

Description: Inflation proves stickier than expected, central banks delay easing or tighten again, or earnings disappoint widely. A notable correction (10–30%) occurs as investors reprice risk.

Signals consistent with this case: widening credit spreads, falling breadth, persistent negative earnings revisions, and abrupt changes in policy forward guidance.

See also

• Stock market bubble
• Monetary policy
• Artificial intelligence and the economy
• Market breadth
• Index investing

References

• CNBC, "'We're pretty upbeat': Stock market experts expect continued growth, bolstered by AI, in 2026," Dec 30, 2025.
• Kiplinger, "We're Still Bullish on Stocks," Dec 29, 2025.
• Morgan Stanley, "Investment Outlook 2026: U.S. Stock Market to Guide Growth," Nov 19, 2025.
• Fidelity, "2026 stock market outlook," Dec 17, 2025.
• Charles Schwab, "2026 Outlook: U.S. Stocks and Economy," Dec 9, 2025.
• Morningstar, "December 2025 Stock Market Outlook: Where We See Investment Opportunities," Dec 3, 2025; and "5 Stocks to Buy in January 2026," Jan 13, 2026.
• U.S. Bank, "Is a Market Correction Coming?" Jan 7, 2026.
• Reuters, reporting by Sriparna Roy and Christy Santhosh, "Biotech rebound and IPO activity," Jan 14, 2026.
• CNBC, "Stocks usually rally big after getting added to the S&P 500 index ...," Jan 16, 2026.
• Benzinga commentary and market data examples (data through 2025).

All dates cited above indicate the reporting or publication date of the referenced source.

External links and data sources

Note: For live market data, institutional outlooks and primary research, consult official reports from the institutions named above or market-data dashboards. This article summarizes public reports and does not link externally in accordance with site policy.

Notes on content scope and usage

This content is for informational and educational purposes only. It is not investment advice, a recommendation, or an offer to buy or sell securities. Past performance does not guarantee future results. Readers with specific financial circumstances should consult a qualified financial advisor.

Practical next steps for readers

• Track the leading indicators listed above monthly (inflation, employment, earnings revisions, capex data).
• Maintain a documented investment plan that addresses diversification and risk tolerance.
• If exploring trading or custody solutions for market exposure, consider Bitget’s trading platform and the Bitget Wallet for custody and asset management services (no links provided).

Further exploration: review the institutional outlooks cited above (Morgan Stanley, Fidelity, Charles Schwab, Morningstar, CNBC) to compare assumptions about earnings and policy. As of the dates shown, the balance of expert commentary was cautiously optimistic but conditioned on execution and macro stability.

Final reading note

If your central question is "are stocks going to continue to go up" remember that the most useful answer is conditional: continued gains are possible if earnings, AI investment, and policy conditions remain supportive, but risks from valuation concentration, sticky inflation or geopolitical shocks can reverse the trend. Monitor the indicators discussed here and treat market moves as information—not destiny.