Three Green Years In: What Comes Next for the S&P

The S&P had another very strong year, rising about +17%. The main drivers were once again big tech and the AI narrative, pointing to higher productivity and earnings. NVIDIA led the race with a gain of +36%.

This marks the third green year in a row, which statistically increases the odds of a red one ahead. Markets don’t go up forever. The last major correction was in 2022, and even the tariff headlines only caused a short-term interruption to the upward momentum in April.

So much for this year. But what about the next? My base case for 2026 is a positive first half, at least. We’ll get a new Fed chair in May and most likely further rate cuts. CPI remains relatively moderate and the economy looks robust. Whether the rally can continue into the second half of 2026 is, in my opinion, still an open question.

There are risks ahead. The AI narrative could turn, too much cost for too little outcome so far? Consumer spending could weaken, or trust in the Fed could erode if its independence comes into question