The US stock market has looked almost untouchable in 2026, pushing higher despite a weakening labor backdrop, persistent inflation, conflict in the Middle East and sharp swings in oil prices.
By mid-August, the S&P 500 had climbed 13 percent for the year and was trading within striking distance of its latest record highs, as powerful market tailwinds continued to outweigh the risks threatening to derail the rally.
Concerns that an oil-fueled inflation flare-up could force policymakers into higher interest rates have so far been swept aside by a blowout earnings season and relentless spending tied to the artificial intelligence data center boom.
Some of Wall Street’s biggest banks now expect the rally to keep running. This week, JPMorgan joined Goldman Sachs, Morgan Stanley and Deutsche Bank in forecasting that the benchmark S&P 500 will reach 8,000 by year-end — a move that would amount to a 17 percent gain for 2026.
‘Overall I think we’re in a bullish trend,’ Laffer Tengler Investments CEO Nancy Tengler told Our News Outlet. ‘I think this is one of the best tapes I’ve seen in my career since the 1990s.’
JPMorgan analysts said the corporate earnings season now nearing its close has been exceptionally strong, prompting the bank to lift its 2026 S&P 500 target to 8,000 from 7,800.
That raises the obvious question: what could knock the market off course? The S&P 500 returned nearly 18 percent last year after gaining roughly 25 percent the year before. For savers whose 401(k) accounts were invested entirely in an S&P 500 index fund, the past three years would have delivered gains of more than 50 percent.
Still, the risks have not disappeared. A renewed inflation surge, a sharp deterioration in the labor market or a prolonged Middle East war could give new Federal Reserve leadership reason to raise interest rates, potentially hitting the brakes on the bull market.
According to analysts at JPMorgan, quarterly results in the earnings season that’s just winding down now have been incredibly strong, supporting the bank’s decision to raise its target for the end of the year from 7,800 to 8,000
This has been the best earnings season since the US economy roared out of the pandemic slump in 2021
Laffer Tengler Investments CEO Nancy Tengler
Corporate America’s quarterly results from the April-to-June period were very strong, with earnings at S&P 500 companies up by an average of 50 percent while 85 percent of companies beat Wall Street’s expectations.
This has been the best earnings season since the US economy roared out of the pandemic slump in 2021, only this time the stunning results were driven by AI infrastructure spending and massive semiconductor outlays.
‘The next phase of the AI trade will be driven by earnings and return on invested capital – not simply by larger spending announcements,’ portfolio manager Joe Tigay told Our News Outlet.
But analysts note that most of the most spectacular gains are concentrated in a small group of huge tech companies.
Goldman Sachs analysts wrote that when gains from just two mega-caps – Alphabet and Amazon – were removed from the total, the S&P 500 earnings growth rate drops to 32 percent.
Removing all mega-cap stocks dropped the index’s earnings growth rate to 26 percent.
And the Goldman analysts said the median S&P 500 company is growing earnings by a much more grounded 12 percent.
That exposes the widening gap between the mega AI tech names and the rest of the stock market, and suggests that the bull market is being driven by big tech’s AI hyperscalers.
Goldman Sachs analysts wrote that when gains from just two mega-caps – Alphabet and Amazon – were removed from the total, the S&P 500 earnings growth rate drops to 32 percent
The odds of a September rate hike are sitting near 50-50. Federal Reserve chair Kevin Warsh testifies during a Senate Banking Committee hearing.
So far the stock market headwinds – sticky inflation, slowing job growth, potentially flagging consumer confidence and the conflict in the Middle East – have hardly made a dent in the rally.
The July CPI inflation report out this week seemed to indicate that US price gains aren’t getting worse – but also suggested they’re not coming down quickly enough. With annualized CPI stuck around 3.4 to 3.5 percent, that’s well above Federal Reserve’s 2 percent threshold of pain.
According to eToro US investment analyst Bret Kenwell, the odds of a September rate hike are sitting near 50-50, disappointing jobs and GDP data have investors debating how much urgency the Fed actually faces to raise rates.
‘An in-line CPI report takes a major inflation surprise off the table after oil prices surged more than 20 percent in July and threatened to reignite price pressures,’ Kenwell told Our News Outlet.
He believes that even one or two rate hikes don’t appear likely to derail the bull market. he more serious threat would be oil climbing back above $100 a barrel, reigniting inflation and forcing a more aggressive Fed response.
For now, earnings remain the market’s primary catalyst, supported by strong growth and a resilient consumer.
