As 2025 concludes, major market indices surged during the “Santa Claus rally,” with analysts anticipating a “re-acceleration” in 2026. The focus has shifted from consumer-led growth to corporate capital expenditure, driven by the enacted One Big Beautiful Bill Act (OBBBA), which allocates $1.4 trillion for U.S. infrastructure. The Federal Reserve’s interest rates are expected to remain higher for longer amid persistent inflation, fostering a cautious financial landscape. Earnings growth projections for 2026 are robust, particularly for companies integrating AI, like Microsoft and Alphabet. However, traditional retailers may struggle due to tariff pressures and high mortgage rates. The shift towards regionalization highlights a broader trend of de-globalization, benefiting firms with domestic manufacturing. As the market evolves, distinguishing “AI winners” from “tariff losers” will be crucial for investors aiming for the S&P 500 target of 7,500. A disciplined approach will be essential in navigating the complexities ahead.
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