US Indices Outlook for 2026

US Indices – The Last Year

Here we are taking a look at US indices, where they’ve been in 2025 and where they’re going in 2026, or at least where they could go. It’s been a very noisy trading year for US equities, which is no coincidence that it was the first year of the Donald Trump administration.

The old tweet machine started firing off, and it caused chaos more than once during the previous year, not the least of which would have been right around the beginning of spring when he suggested that we were going to tariff China quite wildly, and everything fell apart, only to have him turn around and reverse his decision. And since then, it’s been nothing but straight up in the air. Quite frankly, had you thrown your portfolio into a long-only position in equities in April, you’re doing really well.

NASDAQ 100 Marches Higher

The first index that I’ll take a look at is the NASDAQ 100. And of course, that’s the one a lot of people are paying close attention to because of what had been a vicious bounce after selling off drastically, and then a nice 45-degree angle until we got all the way to roughly the end of October. There are certain things that are driving the NASDAQ 100, which might be a little bit more influential here than in other places.

The first one, of course, is the AI situation with artificial intelligence. There have been a couple of concerns out there about a lack of profitability in the artificial intelligence field. After all, most companies that have put money into the artificial intelligence part of their systems approach haven’t actually seen a return yet. Now that doesn’t change anything longer term, but what it does is cause some concern in the index that is so heavily weighted to technology.

With that being said, at the end of the year, we are starting to see some choppy behavior. The question is, where are we going next year? It’s going to be all about AI, would be my guess. That would be the first thing that drives the NASDAQ 100 higher. And even if we were to get some type of pullback, quite frankly, we could drop all the way down to the 22,000 level. And at that point, we’re just revisiting a previous high. It actually wouldn’t be the end of the world.

The US economy will obviously have a major influence as well. But I think this one specifically is going to be about all of the usual suspects, Google, Nvidia, Tesla, etc. As I recorded this, we are struggling, but this would not be the first time we’ve seen that. A deep, healthy correction in the NASDAQ 100 will more likely than not end up being a buying opportunity as earnings growth continues to be optimistic, right along with the AI portion of the equities markets.

Dow Jones 30 Outlook and Macro Drivers

The Dow Jones 30 might be a little bit different in the sense that it’s probably going to be tied to tariffs or global trade, which makes sense. It’s basically industrials and has fared better than the NASDAQ 100 as of late. It suffered the same problems back in April and then simply went up at a 45-degree angle. Unlike the NASDAQ 100, at least in the second half of December, it looks like Dow Jones is holding its own as it is basically teetering on breaking out of an all-time high.

Ultimately, the Dow Jones 30 will probably be more driven by macroeconomic fundamentals such as employment, which, although in the United States it has slowed a bit, it still shows a lot of stubborn growth. There are a lot of jobs available in the United States. And as long as that’s the case, these blue-chip stocks typically do fairly well.

Regarding inflation and growth, it appears that inflation is starting to cool off slightly. That should help. And then, of course, fiscal and tax policies, which most of the fiscal and tax policies that you’ll see out of DC will be pro-business at least for most of the year. And then we do, of course, have the midterm elections at the end of the year. That could change things, but that is a wild card that we don’t have to deal with until late in the year.

There are geopolitical risks, and that goes back more or less to the trade war type of situation. Nonetheless, this is a very healthy-looking market. My suspicion is that Dow Jones 30 will be well above 50,000 next year at one point or another. That doesn’t mean we get there in a straight line, but I think it does suggest that we just continue to see this overall bullish pressure here.

S&P 500 Continues to Look to the 7k Level and Beyond

And finally, let’s take a look at the S&P 500. It’s a little noisy going into the later part of December as well, but this is mainly because the S&P 500 has been hijacked by the same handful of stocks that the NASDAQ 100 has. They’ve basically rotated the Magnificent 7 into the S&P 500, thereby making it difficult for it to fall. That right there is your big clue.

Now, as I record this, it looks like we could be struggling a bit near the 6,900 level, but there’s really nothing there other than psychology that comes into the picture to offer resistance. Quite frankly, I think a break above 7,000 makes quite a bit of sense, especially if the US economy outperforms in 2026, which, quite frankly, most leading indicators do suggest.

With that being the case, and the fact that more foreign money comes into the S&P 500 than any other index around the world, and it’s not even close, I think you continue to see buyers of dips. It’s really not until we break down below the 6,200 level that I think you would have to worry about a serious breakdown. And even then, the S&P 500 has taught us over time that if you get something like a 30 or 40% correction, that is a buying opportunity.

I don’t see anything being any different here, unless of course something catastrophic happens. Geopolitics will be the big wild card here as well. And again, when you think geopolitics, you can talk about Ukraine, you can talk about Russia, but really, it’s about trade more than anything else.

All things being equal, the S&P 500 was very strong until basically November. And now it looks like it is just chopping back and forth. And why wouldn’t it? After the massive gains that we have seen since April, it makes sense that maybe we spend a little bit of time middling around, but there is nothing on this chart that suggests the S&P 500 is in trouble.

My Final Thoughts

US equities on the whole should do fairly well for 2026. Again, you’ll have the leaders and the laggards. The leaders, of course, will be all the usual suspects. A lot of what you’re seeing on the US equities in these charts will be a reflection of passive investing. Everybody who has some type of retirement account owns Nvidia, they own Apple, they own Microsoft. They all own the same things.

And in that sense, trying to short this market is like swimming upstream. It doesn’t mean we won’t have the occasional pullback, but it’s just not designed to fall. And with that, I anticipate that 2026 will be another positive year. I don’t know if it will be as positive as we had seen 2025 behave after April, but the upward momentum is undeniable.