Retiring Soon? Here’s What the Market May Do in 2026 (Market Outlook: Part 2 – Earnings)

Last week, we began to add some meat to the bones of our 2026 market outlook.  Our goal is not to be precisely accurate, but to give Oak Harvest clients and prospects an idea of what issues, as well as opportunities, our investment team thinks 2026 might present investors

Last week we covered seasonality and cycles and how they might be both a tailwind beginning in early 2026 but a headwind throughout most of mid-year.  Since last week’s I recently discovered another amazing chart on recent Trump Presidential cycles that ill share with you If you hang around until the end.

To this week’s topic and video, the most bullish thing the Oak Harvest team can find for 2026?  A very strong anticipated 2026 S&P500 earnings and quarterly earnings growth rates.  How strong? Let’s talk about it.

Currently bottoms up, FactSet’s EPS forecasts have 4q26 quarterly earnings expectations of about $82.5/s exiting the year.  Here’s the Fact quarterly data.

That 4q26 number would be up over +17% yty from the quarter we are in right now, 4q25.  Remember investors, over longer time frames, stocks follow earnings. Here’s a chart from Factset showing that strong trend over time.

The good news is that’s a big number and likely attainable. Also historically, unlike market bottoms that anticipate recoveries, the market doesn’t historically peak in front of earnings but rather coincidentally.

Assuming, no PE contraction in 2026, 17% growth, on top of the current S&P500 of 6850ish would triangulate to a much higher S&P500 at some point in the 2h2026.

 

How much higher? Well 17% above the 6835 level the S&P was trading at would equate to near 8000 at a peak in 2026. Sounds unachievable? We’ve been up + teens % 4 years in a row a few times over history, including yes, the 1995-2000 Dotcom investment cycle. Interestingly, this path would also mirror the path we took along the Dot.com/AI investment cycle pattern post Long-Term capital in October 1998, that stocks have been in sync since the early April lows.  It also triangulates to another cycle peak we’ve seen more recently.  We will discuss that one at the end of this video.

Unfortunately, the things our team look at say even if we were to reach the 7800-8000 level in early 4q26, the market is unlikely to close the year there. But back to the good news.

A few factors that could contribute to these EPS numbers being achievable in 2026 are stronger than expected real GDP growth on the back of elevated BBB incented capex spending by large tech companies. Throw in a rebound in lower end and middle end consumer spending in the middle of the year due to larger tax refunds many spenders will get due to the BBB and those are positive tailwinds. Finally, carryover from a weakening dollar and stable to lower oil prices should also be a tailwind for revenue and earnings in 2026.

Additionally, this earnings growth is not only driven by revenue growth but also due to margin expansion driven by AI-driven productivity gains. The process of AI adoption is early, but larger companies like those in the S&P500 are reporting more progress in AI implementation than smaller firms. AI-related labor productivity gains, which unfortunately might be bad for the labor markets in 2026, but corporate adoption should lead to higher potential productivity boost to build over time.

Here’s Goldman Sachs 2026 forecast for S&P500 sales, margins and EPS growth versus consensus.

They read positive for corporate ROIC in 2026 even with elevated AI capex for many large cap tech names.

And speaking of large cap tech, before you write off the top 7 market cap stocks outperforming in 2026 in favor of the other 493 as many are forecasting, don’t forget that the top 7 stocks are slated to have 23% EPS growth for 2026 while the remaining 493 clock in at an estimate of 11%.

Of course, his much higher S&P500 target assumes no change in PE multiple.  Now there hasn’t been a change in PE multiple in 2025, largely as long-term bond yields have remained stable point to point during the year.  A higher nominal long term interest rate yield would hurt PE multiples, particularly if it’s induced by inflation trending higher. Lower rates on the back of QE in the 2h26 would likely cause PE expansion and make these very high targets more sustainably achieved.

So in summary, investors, earnings should be a big, big tailwind for stocks in 2026.

Now if you hung with me this far, here’s the bonus chart on cycles.  Unfortunately, one this is good news bad news one.  Much to the surprise of me, looking back at the beginning of Trump 2.0, overlaid with Trump 1.0?  Surprise surprise surprise, except for the minor April tariff detour down for a few weeks.  We are following the near exact same path in both price and time of Trump 1.0 in Trump 2.0.  Believe it or not his first term in 2017 ended with the near same exact return as we have had in 2025, albeit with lower volatility.

Here’s the past paths overlayed, from data on Bloomber, much like we’ve shown vs dotcom back in the late 90’s. This is what the future might look like in 2026 should Trump 2.0 continue to mirror trump 1.0.  Interesting to see, Trump 1.0 had a big late Jan top with a large downside move, back then due to “volmagedon”, upwards of -12%, followed by a major rally to new ATHs in October and another -20% drop into XMAS 2018.

Such a repeat in pattern would 1. Equite to roughly 7200-7300 in a 1q peak followed by a fast downward movement of over -10% and then higher into early 4q2018 before another drop.  Would this make sense? Well investors, unfortunately yes, it would make sense if we continued to follow the Dot.com path we have been on for the last few years.

This would make 2026 a bucking bull ride with much higher volatility than we’ve seen the last few years.

The good news, our investment team has experience in these types of bucking bull markets. Remember that elevated volatility also means elevated opportunity, for longer term investors.  Historically, investors’ biggest incremental returns come from investing when volatility is high, not low, and markets are down and others are either acting emotionally or worse yet being forced to sell, when they really should be pushing their chips into the center of the table and adding to investments.

What does all this mean to you?

Our advice to you is to keep following our investment content on our Oak Harvest Website and our YouTube Channels and we will be addressing many of these points and more, and tune into our Livestream on YouTube of our 2026 Market Outlook on —Jan 29.2026-.

Investors, whether you desire growth or income, or a combination of both in your portfolio, the entire OHFG team is here for our clients doing what we can to plan for you and your family’s future regardless of what stage you are at in your career or retirement.

Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect