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A more stable economy means more IPOs are likely in 2026.
Tariff-related inflationary concerns are overblown and will not materialize.
2025 was the Year of the Unexpected
2025 was a year filled with surprises, most notably, the April ‘Liberation Day’ tariff-induced market collapse and the subsequent rip-roaring market recovery where stocks climbed the proverbial “Wall of Worry.” Despite tariff fears inflation remained relatively contained, though precious metals registered their best performance in years. AI stocks were all the rage, though they suffered multiple nasty corrections throughout the year. Meanwhile, Bitcoin suffered from the classic “sell the news” phenomenon after crypto-friendly legislation was passed.
The twists and turns of the 2025 market illustrate just how unpredictable markets and psychology can be. Nevertheless, predictions can be entertaining and thought provoking. Additionally, investors can use historical data and probabilities to make “educated guesses” about the coming year, and at the very least, provide themselves with a potential roadmap. Below are five of my high probability predictions for 2026.
1. The S&P 500 Index will Suffer a Correction of 10% or More During 2026:
Historically, the S&P 500 suffers a 14% peak-to-trough correction roughly one time per year. After an above average return of 16.4% in 2025, investors should expect some potential profit taking along the way.
Image Source: Carson Investment Research
2. The S&P 500 Index will Gain 10% or More in 2026:
Recently, Jerome Powell and the Federal Reserve made the rare and aggressive move of cutting interest rates with the S&P 500 Index at highs. According to Carson Research’s Ryan Detrick, “rate cuts near all-time highs have seen stocks higher a year later 20 out of 20 times.” Meanwhile, stocks have enjoyed above average returns of 13.9% during these instances.
Image Source: Carson Investment Research
3. More Companies will go Public in 2026 than in 2025:
A stable macroeconomic climate, easing inflation, and the maturation of high-growth sectors will lead to more IPOs in 2026. SpaceX, OpenAI, and Anthropic are rumored to go public in 2026. Meanwhile, a backlog of delayed IPOs will likely go public after market volatility-related delays.
Image Source: Stock Analysis
4. There will be no Third Wave of Inflation (CPI will Remain Below 4%):
The biggest fear following the ‘Liberation Day’ tariff unveil was that tariffs would cause inflation. However, what most investors got wrong was that large U.S. retailers like Amazon ((AMZN - Free Report) ), Walmart ((WMT - Free Report) ), and Costco ((COST - Free Report) ) would leverage their massive market share to force suppliers to “eat” tariff costs. Additionally, inflation refers to persistently higher prices, whereas the Trump Administration’s tariffs are merely a one-time increase. Finally, energy, a large component of inflation, is likely to stay low due to rolled regulations and increased production.
Image Source: Truflation
5. GDP Will Soar to >3%:
Easing monetary policy, reduced trade complications, and the biggest tax refunds in history will help to foster a robust economic client in 2026. Furthermore, as the AI revolution will continue to drive the economy. For instance, Zacks Consensus Estimates suggest that Nvidia ((NVDA - Free Report) ) will grow EPS 55% year-over-year.
Image Source: Zacks Investment Research
Meanwhile, AI will move beyond large language models to physical AI gains in products like Tesla ((TSLA - Free Report) ) and Alphabet’s ((GOOGL - Free Report) ) robotaxi networks.
Bottom Line
Predicting the future of financial markets is never an exact science, but by leaning on historical precedents and current economic tailwinds, we can navigate the uncertainty with greater confidence. While 2026 will undoubtedly bring its own set of surprises, the combination of a dovish Fed, a maturing AI sector, and resilient consumer suggests a year of significant expansion.
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5 2026 Market Predictions
Key Takeaways
2025 was the Year of the Unexpected
2025 was a year filled with surprises, most notably, the April ‘Liberation Day’ tariff-induced market collapse and the subsequent rip-roaring market recovery where stocks climbed the proverbial “Wall of Worry.” Despite tariff fears inflation remained relatively contained, though precious metals registered their best performance in years. AI stocks were all the rage, though they suffered multiple nasty corrections throughout the year. Meanwhile, Bitcoin suffered from the classic “sell the news” phenomenon after crypto-friendly legislation was passed.
The twists and turns of the 2025 market illustrate just how unpredictable markets and psychology can be. Nevertheless, predictions can be entertaining and thought provoking. Additionally, investors can use historical data and probabilities to make “educated guesses” about the coming year, and at the very least, provide themselves with a potential roadmap. Below are five of my high probability predictions for 2026.
1. The S&P 500 Index will Suffer a Correction of 10% or More During 2026:
Historically, the S&P 500 suffers a 14% peak-to-trough correction roughly one time per year. After an above average return of 16.4% in 2025, investors should expect some potential profit taking along the way.
Image Source: Carson Investment Research
2. The S&P 500 Index will Gain 10% or More in 2026:
Recently, Jerome Powell and the Federal Reserve made the rare and aggressive move of cutting interest rates with the S&P 500 Index at highs. According to Carson Research’s Ryan Detrick, “rate cuts near all-time highs have seen stocks higher a year later 20 out of 20 times.” Meanwhile, stocks have enjoyed above average returns of 13.9% during these instances.
Image Source: Carson Investment Research
3. More Companies will go Public in 2026 than in 2025:
A stable macroeconomic climate, easing inflation, and the maturation of high-growth sectors will lead to more IPOs in 2026. SpaceX, OpenAI, and Anthropic are rumored to go public in 2026. Meanwhile, a backlog of delayed IPOs will likely go public after market volatility-related delays.
Image Source: Stock Analysis
4. There will be no Third Wave of Inflation (CPI will Remain Below 4%):
The biggest fear following the ‘Liberation Day’ tariff unveil was that tariffs would cause inflation. However, what most investors got wrong was that large U.S. retailers like Amazon ((AMZN - Free Report) ), Walmart ((WMT - Free Report) ), and Costco ((COST - Free Report) ) would leverage their massive market share to force suppliers to “eat” tariff costs. Additionally, inflation refers to persistently higher prices, whereas the Trump Administration’s tariffs are merely a one-time increase. Finally, energy, a large component of inflation, is likely to stay low due to rolled regulations and increased production.
Image Source: Truflation
5. GDP Will Soar to >3%:
Easing monetary policy, reduced trade complications, and the biggest tax refunds in history will help to foster a robust economic client in 2026. Furthermore, as the AI revolution will continue to drive the economy. For instance, Zacks Consensus Estimates suggest that Nvidia ((NVDA - Free Report) ) will grow EPS 55% year-over-year.
Image Source: Zacks Investment Research
Meanwhile, AI will move beyond large language models to physical AI gains in products like Tesla ((TSLA - Free Report) ) and Alphabet’s ((GOOGL - Free Report) ) robotaxi networks.
Bottom Line
Predicting the future of financial markets is never an exact science, but by leaning on historical precedents and current economic tailwinds, we can navigate the uncertainty with greater confidence. While 2026 will undoubtedly bring its own set of surprises, the combination of a dovish Fed, a maturing AI sector, and resilient consumer suggests a year of significant expansion.