2026 Outlook: U S Stocks And Economy

And there’s another important chart in here to help you understand why. The other thing, too, is there’s a data center backlash. So there’s a chart in here that I think is the most important one, which is, how much capacity is the United States adding each year? And so there’ll be a big data center section in there. Data center spending, electric power, going up a lot. The lines for data centers and electricity go up, while office buildings comes down.

Outlook: Us Stocks And Economy

Inflation will have a negative impact on the purchasing power of this Everestex forex broker nominal monetary value. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Past performance is not indicative of future returns. In this episode, Jacky discusses the implications of Japan’s election results, why Asia’s inflation trends continue to diverge from those in the US, and the latest developments in US-Asia relations.

Capital spending on AI, data centers, power generation and digital infrastructure remains a key driver of economic activity. Americans expect a difficult 2026, expressing pessimism about most economic, political and global matters — with the stock market a notable exception. At the same time, Americans broadly anticipate continued economic strain, as a clear majority expect inflation to rise, and half believe unemployment will increase. Pluralities of U.S. adults expect positive momentum in the stock market and overall economic growth, and the public tilts slightly toward believing interest rates will fall rather than rise.

Americans’ Expectations For Interest Rates Are Divided

Aerospace & Defense ETF (ITA), or take an active global approach to companies across aerospace, defense and cybersecurity with the iShares Defense Industrials Active ETF (IDEF). From power grids to the energy exports and from transportation to water & agriculture, infrastructure is the global backbone that supports our day-to-day lives, and is propelling the AI revolution. It’s entering its next growth phase, moving beyond just basic chat prompts into more complex tasks, requiring dramatically more computing power.

Vident International Equity Fund (amex:vidi) Seasonal Chart

“Diversification works when we need it most,” Hyzy adds, “and it could be needed more than ever as you look to integrate thematic, long-term investments with your core portfolio to power your investments into a new era of growth.” “Take advantage of a wide range of industries, capitalizations and geographic locations,” says Hyzy, who suggests considering thematic portfolio additions in defense, power generation and other areas of rising global demand that have the potential for outsized long-term growth. Split decisions, such as occurred in July, September and October 2025, can reflect differences in outlook about economic growth, inflation and the speed of rate hikes or cuts. Having the cost of capital come down at such a time could provide additional fuel for a wide range of companies, further broadening participation in market gains. “From energy grids and data centers to defense systems and digital platforms, power is driving the global economy — and shaping the outlook for 2026,” he says. “From energy grids and data centers to defense systems and digital platforms, power is driving the global economy — and shaping the outlook for 2026.”

Grim Labor Prospects Per Consumers

So far, most people that have used AI have interacted with text-to-text chatbots, which utilize little computing power when compared with other uses of AI, such as image/video generation, agentic systems, and robotics. Of the 46 AI stocks, 44 had a drawdown of at least 20% in 2025. Past performance does not guarantee future results.

Fed Independence: Still Intact

The y axis shows different power companies. Specialized data center power rates still trail cost of new generation. A bar chart with the title Why is there a data center backlash? Another line chart with the same companies. A line chart called, but not at market-wide levels So far, AI infrastructure company benefits only.

• Data from September 2020 to August 2025 using monthly frequency, and data is shown for S&P 500 Index, Bloomberg U.S. Aggregate Bond, Bloomberg Bitcoin spot price, Bloomberg Gold Spot, Hedge Fund represented by HFRI North America Hedge Fund index.
• We see the strongest opportunities in Asian emerging markets, which offer direct exposure to the global AI buildout and the highest earnings growth expectations alongside attractive fundamentals.
• Modernizing electrical grids and developing new energy sources to power artificial intelligence (AI) and other emerging technologies are central to what BofA Global Research describes as the largest economic growth story of our time.
• In other words, the market’s P/E would be moving down for the so-called right reason (i.e., prices not falling rapidly).
• Data center spending, electric power going up a lot.

After reducing interest rates three times in late 2024, the Federal Reserve chose to keep rates steady through most of 2025 amid concerns that tariffs and other factors could rekindle inflation. That would represent a doubling of global electricity capacity used by data centers, and it comes after a decades-long stagnation or decline in demand for electricity in those countries.9 According to the International Energy Agency, electricity for data centers is forecast to make up more than 20% of new power in advanced economies during that period. “It’s about mobilizing capital to meet the $30 trillion opportunities and risks of a rapidly changing world,” says Haim Israel, head of Global Thematic Investing, BofA Global Research.

• Investments in foreign securities involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments.
• Still, the prevalence of the AI theme introduces risks of higher concentration and correlations.
• Staying invested with a defined strategic asset allocation will be key, as attempts to perfectly time market entry and exit points can often result in missing the best-performing days and weeks.
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• Each week, our analysts discuss what’s emerging in global markets on the Global Research Unlocked® podcast.
• PwC expects labor market conditions to remain relatively stable, with the unemployment rate hovering near 4.4% in 2026.

Economic Data

Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. And I’m not sure how much room there is for the non-US stocks to continue to appreciate. If you had swapped out of the S&P into non-US stocks, which is this MSCI World XUS Index, in all the years in between would have substantially underperformed. So the first bar on this chart shows that you would have made almost 900% on your money cumulatively by investing in the S&P 500 since January, 2009. A bar chart entitled It made sense to wait.

Index returns are for illustrative purposes only and do not represent actual fund performance. Data from September 2020 to August 2025 using monthly frequency, and data is shown for S&P 500 Index, Bloomberg U.S. Aggregate Bond, Bloomberg Bitcoin spot price, Bloomberg Gold Spot, Hedge Fund represented by HFRI North America Hedge Fund index. For decades, long-duration government bonds reliably offset equity drawdowns, offering a dependable source of diversification.32 But that relationship has become less stable. Table showing income-focused investment vehicles, their asset classes, what they seek to provide, and benefits to adding them to a portfolio. At the same time, we believe the opportunity set for yield is expanding due to the combination of a resilient U.S. economy and strong AI-driven financing demand.

Value At Risk – Crises And Conflicts

• AI enthusiasm has not only boosted markets, but is also expected to boost productivity and operating efficiency, supporting high margins.
• This could open up an opportunity for USD domestic investors – and we highlight the development of attainable housing – as well as retail – as two promising sectors for undaunted investors.
• Given the stock is at an all-time high of nearly 160 million payrolls, paychecks go out and spending continues.
• And so the last of the four risks that we all need to think about is, Taiwan may be the most blockade sensitive, advanced economy in the entire world.
• All corporate names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Last week also offered some clarity on the two big risks. The reaction to earnings from Meta (on the upside) and Microsoft (on the downside) illustrated the market’s discernment. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment. Staying invested with a defined strategic asset allocation will be key, as attempts to perfectly time market entry and exit points can often result in missing the best-performing days and weeks. This will enable them to respond to market developments in line with their personal investment strategy.