'An excellent backdrop for earnings': Wall Street expects profit growth to power markets in 2026

Wall Street strategists person a connection for investors acrophobic astir the caller play implicit Greenland and formation from US assets: Look for net maturation to powerfulness the banal marketplace higher this year.

"We've got an fantabulous backdrop for net growth,” Richard Saperstein, Treasury Partners main concern officer, told Yahoo Finance connected Thursday. He pointed to easing ostentation and an system that is inactive adding jobs.

With net play underway, analysts expect the S&P 500 (^GSPC) to station year-over-year nett maturation of astir 8.3% for the 4th quarter, according to Bloomberg data. Meanwhile, FactSet analysts task that maturation could emergence supra 14%, marking the 5th consecutive 4th of double-digit net expansion.

Of the 33 S&P 500 companies that person reported 4th fourth results done Jan. 16, 79% bushed the mean earnings-per-share estimate, according to FactSet.

BNY Wealth strategists besides expect net maturation of astir 14% this year, successful portion driven by taxation incentives and superior expenditure benefits from President Trump’s "Big Beautiful Bill," which fundamentally lowered the firm taxation complaint by astir 3%.

The bank’s strategists expect net contributions to travel from different sectors too tech and the "Magnificent Seven" cohort.

“It's not arsenic concentrated a market,” Alicia Levine, caput of concern strategy and equities astatine BNY Wealth, said past week during a 2026 outlook roundtable.

“You're yet getting net maturation from the remainder of the market, and that's partially what's driving the cyclical tilt to the market,” she added, pointing to the caller outperformance successful sectors specified arsenic Materials (XLB), Industrials (XLI), and Energy (XLE).

Treasury Partners' Saperstein said his firm's halfway presumption is inactive with large-cap tech stocks.

"The AI universe, that inclination is truly 1 of the main ones driving the economy," helium said.

He besides said that helium would debar parts of the marketplace affected by projected argumentation changes by President Trump, specified arsenic recognition paper complaint caps oregon restrictions connected organization homeownership.

Wall Street besides anticipates immoderate easing from the Federal Reserve, with a statement anticipation of 2 complaint cuts this year. Strategists expect the cardinal slope to person a much dovish stance erstwhile a caller Fed seat is appointed to regenerate Jerome Powell aft his word ends successful May.

Read more: How overmuch power does the president person implicit the Fed and involvement rates?

That could beryllium affirmative for medium-term bonds.

"If rates bash travel down ... that five-year, 10-year duration abstraction successful the US Treasury marketplace feels similar it's going to springiness you a bully return," F/m Investments CEO and main concern serviceman Alex Morris told Yahoo Finance.