Sam Stovall on Market Expectations for 2026: 7,400 Target and Midterm Year Volatility

Market Outlook for 2026

• 🎯 Sam Stovall predicts the market will end 2026 at approximately 7,400, suggesting a good, though not great, year.
• 📈 This forecast is based on the expectation that 2026 will be the fourth year of a bull market, which historically tend to last over six years.
• 💰 Earnings growth is projected to be around 14% to 15% for 2026 and 2027, supporting the upside potential for the market.

Historical Market Performance

• 📊 Since World War II, the average price change in the market has been 9.3%, with the target for 2026 being slightly less than this long-term average.
• ⏳ Achieving four or five consecutive up years is rare, having occurred only three times in the last 85 years.

Midterm Election Year Dynamics

• ⚠️ Midterm election years are characterized by higher volatility, with average gains historically less than 4% and a frequency of advance just above a coin toss at 55%.
• 📉 The average drawdown in midterm years has been 18%, making it the most challenging period within the four-year presidential cycle.
• 🚀 Despite midterm volatility, history shows that from October 31 of a midterm year to October 31 of the following year, the market has historically been higher, averaging a 16% gain as uncertainty dissipates.