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Bull Run Set to Continue, But Don't Expect a Stampede in 2026, Market Strategist Warns

MarketDash Editorial Team
2 hours ago
Market strategist Jay Woods predicts modest single-digit gains for the S&P 500 in 2026, citing tariff uncertainty, Federal Reserve transitions, and midterm elections as key volatility drivers that could slow the market's momentum.

The SPDR S&P 500 ETF Trust (SPY) has been on a tear in 2025, hitting multiple all-time highs including a record during Christmas week. But if you're expecting another blockbuster year in 2026, you might want to temper those expectations. According to one market expert who nailed his 2025 forecast, next year is shaping up to be considerably more subdued.

A More Modest Year Ahead

Jay Woods, Chief Market Strategist at Freedom Capital Markets, is calling for the S&P 500 to gain just 3% to 5% in 2026, which would put the index somewhere around 7,200 to 7,250 by year-end. That's quite a comedown from the double-digit gains investors have grown accustomed to lately.

"We're going to see a year of single-digit growth in the S&P 500, 3% to 5% gains, which puts us in the 7,200 range going into next year," Woods explained. "I think the bull run continues, but the stampede is not going to be there."

The culprit? Uncertainty on multiple fronts. Woods is particularly concerned about tariff policy creating an early stumble. He's also watching market cycles closely, noting that while growth remains intact, there are significant headwinds that are tough to price in right now.

What Could Create Volatility

Woods highlighted several factors that could shake things up throughout 2026. Beyond tariffs, he pointed to recent CPI data that's missing some crucial pieces of the puzzle, particularly shelter and food costs, both of which are impacted by tariff policies.

Then there's the Federal Reserve situation. With a new Fed chairman potentially on the horizon and midterm elections looming, Woods expects considerable turbulence.

"I suspect we'll have more dissensions from this new Fed than we did under Jerome Powell and it's going to be very fascinating to see if they can all get on the same page," Woods said.

The Fed's independence is another critical wildcard. Woods believes Powell is currently laying the groundwork for a legacy as an independent central banker, but the tension between Fed policy and Washington rhetoric could get interesting.

"It's going to be fascinating where Fed policy meets Washington rhetoric and I don't think the Fed has the votes to really honor Trump's mandated, self-mandated goal of 1.75%," he noted.

Track Record Worth Noting

Before you dismiss Woods' cautious outlook, consider his recent accuracy. He predicted the S&P 500 would finish 12% to 15% higher in 2025, closing around the 6,900 level. That forecast is looking remarkably precise.

"I nailed it this year," Woods said of his 2025 prediction, adding that he was "very confident" going into the year because he understood what a Donald Trump presidency historically meant for markets.

Woods even correctly predicted early-year volatility, saying Trump would come "out of the gates firing on all cylinders on tariffs. And that will cause a stumble. We had a stumble."

As of Monday, the S&P 500 is up 17.7% year-to-date in 2025, with just two trading days remaining. Assuming no dramatic swings, this will mark the fourth-best performance in the last five years and the seventh-best in the last decade.

Putting It in Perspective

The SPY has posted gains of 24% or more in three of the last four years. The only miss came in 2022, when the ETF dropped 18.2%.

If Woods' 2026 prediction of 3% to 5% gains materializes, it would represent one of the weakest performances of the last decade, better than only the 18.2% decline in 2022 and the 4.6% drop in 2018.

That doesn't mean the bull market is over. Woods is clear that growth continues. But investors expecting another year of explosive gains might need to adjust their expectations. The market is still climbing, just at a much more leisurely pace with plenty of potential bumps along the way.

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Bull Run Set to Continue, But Don't Expect a Stampede in 2026, Market Strategist Warns

MarketDash Editorial Team
2 hours ago
Market strategist Jay Woods predicts modest single-digit gains for the S&P 500 in 2026, citing tariff uncertainty, Federal Reserve transitions, and midterm elections as key volatility drivers that could slow the market's momentum.

The SPDR S&P 500 ETF Trust (SPY) has been on a tear in 2025, hitting multiple all-time highs including a record during Christmas week. But if you're expecting another blockbuster year in 2026, you might want to temper those expectations. According to one market expert who nailed his 2025 forecast, next year is shaping up to be considerably more subdued.

A More Modest Year Ahead

Jay Woods, Chief Market Strategist at Freedom Capital Markets, is calling for the S&P 500 to gain just 3% to 5% in 2026, which would put the index somewhere around 7,200 to 7,250 by year-end. That's quite a comedown from the double-digit gains investors have grown accustomed to lately.

"We're going to see a year of single-digit growth in the S&P 500, 3% to 5% gains, which puts us in the 7,200 range going into next year," Woods explained. "I think the bull run continues, but the stampede is not going to be there."

The culprit? Uncertainty on multiple fronts. Woods is particularly concerned about tariff policy creating an early stumble. He's also watching market cycles closely, noting that while growth remains intact, there are significant headwinds that are tough to price in right now.

What Could Create Volatility

Woods highlighted several factors that could shake things up throughout 2026. Beyond tariffs, he pointed to recent CPI data that's missing some crucial pieces of the puzzle, particularly shelter and food costs, both of which are impacted by tariff policies.

Then there's the Federal Reserve situation. With a new Fed chairman potentially on the horizon and midterm elections looming, Woods expects considerable turbulence.

"I suspect we'll have more dissensions from this new Fed than we did under Jerome Powell and it's going to be very fascinating to see if they can all get on the same page," Woods said.

The Fed's independence is another critical wildcard. Woods believes Powell is currently laying the groundwork for a legacy as an independent central banker, but the tension between Fed policy and Washington rhetoric could get interesting.

"It's going to be fascinating where Fed policy meets Washington rhetoric and I don't think the Fed has the votes to really honor Trump's mandated, self-mandated goal of 1.75%," he noted.

Track Record Worth Noting

Before you dismiss Woods' cautious outlook, consider his recent accuracy. He predicted the S&P 500 would finish 12% to 15% higher in 2025, closing around the 6,900 level. That forecast is looking remarkably precise.

"I nailed it this year," Woods said of his 2025 prediction, adding that he was "very confident" going into the year because he understood what a Donald Trump presidency historically meant for markets.

Woods even correctly predicted early-year volatility, saying Trump would come "out of the gates firing on all cylinders on tariffs. And that will cause a stumble. We had a stumble."

As of Monday, the S&P 500 is up 17.7% year-to-date in 2025, with just two trading days remaining. Assuming no dramatic swings, this will mark the fourth-best performance in the last five years and the seventh-best in the last decade.

Putting It in Perspective

The SPY has posted gains of 24% or more in three of the last four years. The only miss came in 2022, when the ETF dropped 18.2%.

If Woods' 2026 prediction of 3% to 5% gains materializes, it would represent one of the weakest performances of the last decade, better than only the 18.2% decline in 2022 and the 4.6% drop in 2018.

That doesn't mean the bull market is over. Woods is clear that growth continues. But investors expecting another year of explosive gains might need to adjust their expectations. The market is still climbing, just at a much more leisurely pace with plenty of potential bumps along the way.