A wave of optimism among equity investors is building ahead of 2026, driven by strong earnings growth, rising corporate confidence, and accelerating capital deployment. Key indices and sector performance suggest a sustained upward trajectory in global markets.
- 78% of investors express bullish sentiment heading into 2026, up from 54% in early 2024
- S&P 500 gained 18.3% in 2025; Nasdaq-100 surged 31%
- Nvidia (NVDA) rose 122%, Meta (META) gained 93% in 2025
- U.S. companies announced $1.4 trillion in buybacks in 2025, a 29% YoY increase
- M&A activity totaled $860 billion in 2025, the highest since 2021
- Average forward P/E ratio for large-cap U.S. stocks at 22.5x
Market participants are entering 2026 with one of the most optimistic outlooks in recent history, as investor sentiment surveys indicate a 78% bullish consensus across major developed economies. This marks a significant increase from the 54% recorded at the start of 2024, reflecting growing confidence in continued economic expansion and corporate profitability. The S&P 500 has risen 18.3% year-to-date through December 2025, outpacing the MSCI World Index’s 14.7% gain. Technology and consumer discretionary sectors led gains, with Nvidia (NVDA) posting a 122% advance and Meta Platforms (META) up 93%, contributing to a 31% surge in the Nasdaq-100. These movements reflect strong demand for AI-driven innovation and resilient consumer spending. Corporate actions further support the bullish trend: U.S. firms announced $1.4 trillion in share buybacks during 2025, a 29% increase over 2024 levels, while merger activity reached $860 billion—its highest annual total since 2021. Infrastructure investments and strategic acquisitions in clean energy and semiconductors are fueling expectations of sustained productivity gains. The rally has drawn attention from institutional allocators, with hedge fund net long positions in equities reaching their highest level since Q1 2022. However, analysts caution that elevated valuations—average forward P/E ratios now stand at 22.5x for large-cap U.S. stocks—could prompt volatility if earnings growth fails to meet expectations in early 2026.