All things being equal, there are compelling reasons to believe that 2026 will provide wise and experienced investors additional opportunities to expand wealth and grow assets. Here are three macro factors that should be stimulative to the economy and the financial markets. First, though Jerome Powell’s term as the Federal Reserve Chairman ends in May, the incoming chair is likely to be more accommodative on monetary policy, and subsequently overall Fed policy will shift toward easing conditions. This shift may signal lower interest rates, which should benefit public and private equity, fixed income and general economic conditions. Second, although corporate earnings for domestic large cap stocks have set all-time records for five successive years through 2025, they will continue to move higher in 2026. This earnings growth in 2026 may be the largest percentage increase experienced for several years. In contrast, growth has been more modest in mid-cap, small-cap, and international equity earnings in recent years. Forecasts suggest earnings for these segments should accelerate meaningfully in 2026. Valuations are arguably quite reasonable when factoring in future earnings expectations, despite current equity valuations appearing relatively high. And third, administrative policies put in place in 2025 are likely to benefit the domestic and global economy in 2026. Progress on resolving tariff-related issues and international conflicts, combined with new domestic tax initiatives, could help stimulate meaningful economic expansion.
