Investment Expert Alicia Levine's 2026 Market Outlook: S&P 500 Forecast & Consumer Spending

2026 Market Outlook and S&P 500 Forecast

• 📈 BNY Wealth's Alicia Levine projects the S&P 500 to rise 10-12% in 2026, based on earnings growth of 13-14%.
• 🎯 The high-end forecast for the S&P 500 is 7,600, assuming a 21 times multiple.
• 💡 Earnings estimates are expected to broaden, with a positive outlook for healthcare, financials, and industrials, in addition to continued strength in tech.

Tech Sector and Geopolitical Factors

• ⚡ The tech sector remains attractive, with many companies trading at a lower multiple than their growth rate, even with export controls to China.
• ⚠️ A conservative base case scenario assumes export controls will remain, but there is potential for estimate increases if conditions change.
• 🧩 Both sides of the risk spectrum should be considered in market outlooks.

Consumer Spending and Economic Drivers

• 🛍️ Consumption, representing 70% of US GDP, has shown resilience, with discretionary companies performing better than expected.
• 📉 The current economic picture supports the need for a Fed rate cut, with job numbers increasing the probability for December.
• 💰 Households without financial assets particularly need a rate cut, as cheaper borrowing costs would boost consumption.
• 💸 A $160 billion consumer stimulus is expected by April, which will provide a significant boost.

Small and Mid-Cap Market Performance

• 🚀 The Russell 2000 (small and mid-cap stocks) is showing strong performance, as these companies often rely on borrowing to grow.