Markets in 2025 proved one thing: policy rules the road. Fiscal and monetary decisions caused sharp swings, and 2026 looks no different.

Expect interest rates to ease, inflation to stay contained, and corporate earnings to support growth — but volatility will remain. In a policy-driven market, diversification, agility, and alternative investments are key. Read more in our monthly economic update.

The U.S. economy is expected to benefit from fiscal support next year, notably the One Big Beautiful Bill Act (OBBBA), which may help corporate America sustain mid-single-digit revenue growth. Coupled with AI-driven efficiency gains, these factors could support double-digit earnings growth—a key driver for stock prices given limited room for P/E (price/earnings) expansion. Corporate America’s ability to meet these lofty earnings targets will be central to equity performance in 2026.

Rising Markets Climb Walls of Worry. For this month’s update, we’re sharing highlights from LPL’s most recent Weekly Market Commentary because it captures many of the same hopes — and concerns — we’re discussing with clients right now.

This past weekend, the world’s top economic leaders gathered in Wyoming for the annual Jackson Hole Symposium. It’s not just a meeting in the mountains—it’s often where the Federal Reserve (the Fed) signals what might be coming next for interest rates, the job market, and the economy overall.

As we move through the second half of 2025, markets continue to wrestle with conflicting forces. On one side, economic data shows resilience; on the other, persistent deficit spending and rising Treasury issuance are pressuring interest rates higher. LPL Research expects the 10-year Treasury yield to remain elevated, potentially ending the year in the 4.0% to 4.5% range. This is being driven in large part by America’s ballooning debt, which now exceeds $36 trillion, and an increase in interest expenses that could make up nearly a quarter of the federal budget by 2054. Adding to the challenge, foreign investors are becoming less attracted to U.S. Treasuries due to higher rates in their home countries and costly currency hedging. Meanwhile, the Treasury yield curve remains relatively flat, offering little incentive to take on additional interest rate risk.

There have been plenty of catalysts supporting the broader market’s recovery from the correction lows seen in April and May. Oversold conditions, driven by indiscriminate selling, left the S&P 500 with washed-out market breadth and a much-needed reset of its elevated valuation levels. First-quarter earnings season turned out much better than expected, with most companies refraining from lowering forward guidance. One of the less-discussed but impactful drivers has been corporate buybacks, which likely provided an additional tailwind to the market’s quick recovery.

Can Earnings Keep Up with Stocks?

Last week brought a welcome rebound in the markets, driven by a more appeasing tone from the White House toward China and reassurance from President Trump that he won’t remove Federal Reserve (Fed) Chair Jerome Powell.

U.S. equity markets officially entered correction territory two weeks ago for the first time in 344 trading days.

Key Pillars of the Bull and Bear Cases in 2025.

Markets were jolted early this week (especially AI oriented technology companies) as DeepSeek was recently revealed as an advanced AI research and development initiative focused on creating powerful language models and AI-driven tools.

In this week’s newsletter, we’re spotlighting key highlights from LPL, which provides an in-depth look at what next year’s economic and market environment might hold.

Understanding market trends is vital for all investors, no matter their political views, as elections and policy changes impact economic and financial outcomes—so we provide clear, unbiased updates to guide you.

When it comes to investing, gold may be the antithesis of artificial intelligence (AI).

Pullbacks are the stubbed toe of the stock market. Our LPL Research analyst shared that he was reminded of this over the last week as he contemplated the recent surge in volatility while picking up toys after his two-year-old finally fell asleep.

The big buzzword of the day is Artificial Intelligence (AI). While some are drawing parallels between the current period and the late-1990s tech bubble and concluding that a decline may be coming, that’s not our view at all.

To say May was an eventful month for the market is an understatement. Investors navigated around the latter half of first-quarter earnings, a breakout to record highs for the broader market, elevated volatility across fixed income and currency markets, and a mixed bag of economic data — not to mention elevated political uncertainty stemming from the conviction of former President Donald Trump.

The “Sell in May and Go Away” maxim originated in London under a slightly modified phrase: “Sell in May and go away, come back on St. Leger’s Day.” The St. Leger is a famous fall horse race in the U.K. that dates back to 1776.