The S&P 500 Has Soared 92% During This Bull Market. History Says the Stock Market Will Do This in 2026.

The S&P 500 has been in a bull market since Oct. 2022 and is up 92%, well below the 184% average gain of prior bull markets, suggesting room for additional upside; Wall Street’s bottom‑up median target is 7,968 (≈16% upside) for the next year, with forecasts ranging from Evercore’s 9,000 (≈31% upside) to Bank of America’s 7,100 (≈3% upside). Analysts expect earnings growth to accelerate modestly in 2026, but the market already prices much of that outlook and the Fed is only penciled in for one 25bp cut, while the S&P trades at 22.4x forward earnings versus a five‑year average of 20x. Given stretched valuations and policy/geo risks such as tariff plans, the piece advises caution—favor reasonably priced, durable earnings growers over momentum names.

Analysis

The S&P 500 has been in a bull market since the October 12, 2022 low and is up 92% from that trough; this performance is well below the historical average bull-market gain of 184% reported by Yardeni Research, implying that the current cycle could have additional upside if history repeats. The index is up 17% in 2025 and is on track for a rare third consecutive year of double-digit returns, but past episodes of extended gains have often been followed by muted near-term returns.

FactSet's bottom-up median target for the S&P 500 is 7,968, implying roughly 16% upside from the current level of 6,864, while sell-side forecasts range from Evercore’s 9,000 (31% upside) to Bank of America’s 7,100 (3% upside). Analysts expect 2026 earnings growth to accelerate by about one percentage point, yet the market already prices a premium: the S&P trades at 22.4x forward earnings versus a five-year average of 20x, and the Federal Reserve is only penciled in for one 25bp cut in 2026.

Valuation stretch and policy risks are the principal near-term constraints; the article flags President Trump’s tariff proposals as a tangible growth headwind and explicitly recommends avoiding momentum stocks. The practical implication for investors is to temper exposure to richly valued momentum themes, favor companies with reasonably priced, durable earnings growth (including selective AI beneficiaries where valuation is justified), and monitor macro signals (Fed action, tariff developments, and consensus earnings revisions) that would materially change the upside scenarios.

Key Decisions for Investors

• Trim or hedge positions in high-forward‑P/E momentum names given the S&P 500’s 22.4x forward multiple and stretched valuations
• Reallocate toward reasonably priced stocks with durable five‑year earnings visibility and selective exposure to AI where fundamentals justify current valuations
• Maintain disciplined position sizing and monitor consensus target (7,968) and downside scenarios (BofA 7,100); increase hedges if Fed cuts do not materialize or tariff policy escalates