(Bloomberg) - Wall Street equity forecasters are famously bullish, but their current level of optimism for 2026 is cause for worry among some market watchers.
Sell-side strategists across major firms have issued year-end targets for the S&P 500 Index that are clustered the tightest in almost a decade, according to data compiled by Bloomberg. With the highest forecast from Oppenheimer & Co. at 8,100 and the lowest from Stifel Nicolaus & Co. at 7,000, the gap in their annual outlook is just 16%.
Such lockstep views are generally considered a contrarian signal — when everyone’s leaning the same way, the imbalance often rights itself. They also come at a time when market risks are visible. Inflation remains above the Federal Reserve’s target, leaving expectations for monetary policy easing vulnerable to disappointment. The unemployment rate has ticked up steadily over recent months, and heavy artificial intelligence spending has yet to be monetized.
Still, strategists on average see a roughly 11% gain for US stocks in 2026, even after three straight years of double-digit returns.
“The unanimity and the clustering of outlooks is concerning to me,” said Steve Sosnick, chief strategist at Interactive Brokers LLC. “If everyone is expecting the same thing, then by definition, it’s already priced into the market — especially when the rationales for the consensus outlooks are so often predicated upon similar foundations like rate cuts, tax cuts, and continuing dominance of AI.”
Oppenheimer and Deutsche Bank AG see the S&P 500 eclipsing the 8,000 milestone by the end of next December. Even the dimmest targets of 7,000 and 7,100 from Stifel and Bank of America Corp. imply modest upside from Friday’s close.
The bullishness is predicated on economic growth that will power corporate earnings. Tax and regulation cuts should bolster economic activity, along with predictions for two quarter-point rate cuts from the Fed, the optimists say. Pessimists see what amounts to complacency.
“When S&P 500 targets cluster this tightly, it suggests expectations are well priced and forecasts can become fragile — that leaves the market more sensitive to incremental disappointments,” said Dave Mazza, chief executive officer of Roundhill Financial Inc. “If everyone’s on the same side of the boat, it doesn’t take a recession to cause volatility, it just takes earnings misses, policy surprises, or positioning with no margin for error.”
Publishing an S&P 500 prediction is a longtime Wall Street practice, with analysts from major banks to niche investment shops unveiling their numbers toward the end of every calendar year. Yet the forecasts are notorious for being consistently wrong. Targets for the S&P 500 tend to trail the actual index’s performance by two months, according to data from Piper Sandler & Co. The behavior is the same for individual stock targets, too.
“The direction of the market is a better leading indicator of changes to consensus targets than consensus targets are a leading indicator of the market,” said Piper’s chief investment strategist Michael Kantrowitz. “I believe that strategists produce targets as shorthand for whether they are bullish or bearish.”
Despite longer-term worries about tech concentration and AI, optimism over a strong economy buoyed by recent interest rate cuts and the White House’s tax bill are lifting investor sentiment.
“The risk is that everyone’s generally optimistic because we’re chugging higher,” said Greg Boutle, US head of equity and derivative strategy at BNP Paribas. “I think one way to think of it is the most probable outcome is higher, but that always makes you start to think that if you have an external shock, it then can become more impactful.”
By Alexandra Semenova and Lu Wang
With assistance from Matt Turner
