Despite a challenging backdrop of political friction and macroeconomic uncertainty, RBC Wealth Management believes the US stock market and economy might still deliver gains in 2026.
Its latest analysis warns that some common estimates may be overly optimistic, but notes there is headroom for growth, particularly if the American economy holds up and corporate earnings remain steady.
RBC considers the often cited 12.8% year-over-year earnings growth projection for the S&P 500 in 2026 “somewhat too lofty.” However, the firm still expects a solid double-digit increase is possible. On the economic front, the forecast calls for US GDP expansion of around 2.2% in 2026.
"The US economy and corporate profits must maintain healthy growth, 'AI 2.0' needs to lead to tangible gains and the market must buck the trend of average 22% correction surrounding midterm election years," says Kelly Bogdanova, vice president and portfolio analyst at RBC Wealth Management US. "It's a tall order, but the market has jumped over high hurdles before."
The outlook comes with some caution though and RBC points out areas of risk such as complex financing arrangements and large capital expenditures, which could be constrained by regulation or infrastructure challenges. These raise what RBC describes as “yellow warning signs rather than a full-fledged bubble at this stage.”
On the bonds side, RBC sees muted returns for 2026. With inflation projected to stay a touch above 3% and the Federal Reserve expected to hold rates steady, bond yields could rise, reducing bond prices and limiting overall return potential. The firm expects the 10-year Treasury yield to reach about 4.55% by year-end, up from around 4.06% today; a scenario that may disappoint fixed-income investors.
Given this mixed but cautiously optimistic outlook, RBC recommends investors consider a diversified portfolio tilted toward more defensive sectors such as healthcare, and to include dividend-paying stocks that combine resilience with potential upside.
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