The market is entering the final phase of the year with a strange energy that mixes comfort and expectations. The reopening of the US government has brought back the normal flow of statistics, allowing investors to breathe after weeks of uncertainty. The return of data has been key because outages have forced the Fed (Federal Reserve) To calibrate decisions regarding rates with lower than normal visibility. This fog dissipated when the Standard & Poor’s 500 index resumed its upward movement, which led it to touch the limits of the level. 7000 points. The index is moving towards this level with movements that many analysts consider a precursor to a broader debate. This is called debate 2026.
The change in focus is not a coincidence. Major investment companies have been insisting for weeks that next year will mark a turning point in the cycle. UBS Public RelationsEve The S&P 500 index is moving towards… 7500 points. According to strategists at the Swiss bank, more than half of the progress planned for next year will be driven by major technology companies. This idea is directly related to Goldman Sachs’ analysis It maintains its forecast of 6% profit growth for the index as a whole, and stresses that the development of large-cap companies will be crucial in maintaining expansion.
Another signature like Black Rock It offers an important nuance. The manager warns that the market has lived for several months with valuations that consistently exceed long-term averages. per (Future price-earnings ratio) From the movements of the S&P 500 index in a range of 22-24 Earnings times and CAPE Schiller (Compares the current price of the index with Average real earnings for the past ten years Inflation adjustment), stays up 33 times.
These expectations orbligan To check 2026 More accurate appearance. Bank to America He shares this insight and recalls that the concentration of technological gravity is reaching levels similar to those of the years before the dot-com bubble burst. The four largest companies in the index already exceed 25% Of the total capital. In this context, the question is not who The market will be led but which scenario will dominate the year which is the regulation of expectations and reality.
Goodness
he Best scenario He always comes up with a story that sounds compelling. In this case, the story is based on Expansion of artificial intelligence (Amnesty International) And the flexibility of the American economic cycle. Nasdaq companies increased their investments in cloud computing infrastructure and advanced models throughout the year, and analysts expect these investments to achieve increasing returns from… 2026.
UBS notes that the productivity of companies that adopt advanced automation and analytics systems can improve by between one and five percentage points. That jump It will allow business margins to be sustained near 12%, This is already higher than the historical average.
Aggregate data accompanies this story. Core inflation has moderated to 3% annually and labor costs have been growing at the slowest pace ever since 2021. Labor market he Cools without losing stability, This reduces the risk of a sudden recession. the Federal Reserve Bank An interest rate cut can be implemented before End of 2025 If the inflationary trend continues, this reduction would work to ease financial conditions in the first quarters of the year 2026.
In this scenario, consumption remains reasonably constant and private investment in technology continues to gain momentum. The S&P 500 is advancing on a combination of technology momentum and improving macro expectations. The result is a strong year that prolongs a more resistant expansionary cycle than expected just a few months ago.
The ugly…
Ugly is not so scary, but It significantly underestimates the expectations of recent years. This scenario is based on clear recognition. Growth will continue, But in a more moderate way. Analysts working with this framework expect so Standard & Poor’s 500 EPS Advance Between 5%-6%. This number coincides with PRThe vision Central bank Goldman Sachs which puts the expected annual return for the next decade around 6.5%.
These expectations depend on three factors. The first is that spreads are already at high levels and are unlikely to expand significantly again. The second is that valuations will tend to moderate while prices settle into a higher environment than in the past decade. The third is that adoption Amnesty International It will bring efficiency, But with a more gradual and less dramatic effect than the most optimistic scenarios.
The S&P 500 is ahead on this path, But it does so by alternating phases of impulsiveness with episodes of doubt. US GDP growth may be close to 1.5%, This is a number that reflects the return of consumption to normal and cautious business investment after a year of rapid expansion. Inflation will remain stable around it 3%, Which would allow the Fed to lower interest rates very slowly. Ugly moves between cycle resistance and brakes imposed by tense ratings.
..and the bad
The most dangerous scenario appears when the imbalances that everyone knows begin to appear at the same time. This path starts from an accurate image. CAPE greatly exceeds 30 ptogether, This is a number that has historically been associated with weaker returns in the medium term. currently, Corporate margins are close to 12.7%, This is a level that many economists see as difficult to maintain in an environment characterized by structurally higher rates. The risk is not at the marginn Current, but it is likely to fall. next to, Expand on Amnesty International It may not translate into immediate productivity gainshe warns Oxford Economy.
Geopolitical risks reinforce this scenario. Bank to America Remember, increases in trade barriers and new tariffs on Chinese products could increase import costs over the next year. Black Rock He adds that industrial relocations and fragmentation of global trade are creating additional pressures on supply chains.
If the economy slows quickly or if interest rates remain high for longer than expected, It may become difficult to justify current valuations. In this case the S&P 500 could close 2026 With a significant adjustment and forcing the market to rethink expectations For the next few years.
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