Wall Street Strategists See Earnings Growth Powering 2026 Market Rally

Wall Street strategists project corporate profit growth will drive the stock market higher in 2026, citing a resilient economic backdrop and broadening earnings expansion beyond the technology sector. Analysts expect S&P 500 year-over-year earnings growth for Q4 2025 to be approximately 8.3%, with full-year 2026 growth forecasts around 14%. This earnings expansion is anticipated to be more sector-diverse, with recent outperformance in Materials (XLB), Industrials (XLI), and Energy (XLE). Strategists also note supportive factors including easing inflation, potential Federal Reserve rate cuts, and structural trends in AI and electrification. Despite expected short-term geopolitical volatility, underlying fundamentals are seen as the primary market driver. UBS forecasts S&P 500 EPS growth of about 10% for 2026, with a year-end index target of 7,700.