The bull market is alive and well, with the S&P 500 passing the 6,500 mark with sights set on 7,000 for the next year. Undoubtedly, widespread skepticism may keep the bull in check, as investors become just a bit more cautious with the basket of AI winners that have led the market so far this year. While the skeptics, bears, and doomers may be right to tilt more conservatively (think defensive dividend stocks) as we progress through September, I think most investors should not attempt to time the market. Instead, incremental buying with the long-term plan in mind, I think, is the way to go.
While the S&P 500 and Nasdaq 100 have been full of positive surprises this year, especially given the last two years have been an incredible historical year for returns, many market strategists think there’s little reason to think the bullish ascent will end with a painful correction or worse. In fact, the consensus seems to point towards more gains in 2026, with several banks setting their sights on the 7,000s.
Raising the bar for the S&P in 2026
As the Fed cuts rates, another chapter of the AI revolution unfolds, and the economy stands tall in spite of tariff uncertainties, there are certainly ingredients for a continued bull run. Add the weak jobs numbers into the equation, as well as hopes for more dovishness from the Fed, and we may be entering a “bad news is good news” kind of environment. In any case, one of the more bullish strategists on Wall Street thinks the S&P 500 may just hit the 9,000 level next year if the Fed winds up overstimulating the economy as it moves ahead with its next rate-cut cycle.
Evercore ISI senior strategist Julian Emanuel thinks that a bull case might just play out. Indeed, Fed rate cuts and an inflating of the AI bubble (I don’t think there’s a massive bubble quite yet) may very well cause such a stock market melt-up for the ages. How it’ll end, though, remains a mystery. In any case, investors may wish to hang in for the ride as they look to rotate into more defensive assets over time.
Is the S&P 500 at 9,000 too bullish for a bull case?
I’ll admit, the S&P at 9,000 seems a tad excessive. That’d entail a massive 39% gain from Friday’s close. Given how influential the Magnificent Seven companies have been, I don’t think it’s entirely out of the question, especially if Wall Street ends up underestimating the potential economic gains generated by AI agents and the emergence of some form of superintelligence.
In any case, 9,000 isn’t Evercore ISI’s base case. It’s more of a bull-case scenario. In terms of the base case, Mr. Emanuel sees the target at a still-lofty 7,750. That works out to a gain just north of 19%. Still an impressive return for around a year and change!
Though I tend to take market strategist price targets with a fine grain of salt, I do think that Mr. Manuel’s bull case is worth thinking about. Indeed, a lot of things need to go right with AI, and the Fed will need to be accommodating. If President Trump challenges the Fed’s independence, we may be entering uncharted territory. Either way, I don’t think President Trump needs to get too involved with the Fed’s dealings to get some rate cuts, which now seem to be on tap.
Fed cuts and AI growth could bring forth more gains. But mind the bumps
The big question moving forward is how many cuts we’ll get. If there’s a dovish surprise and AI keeps delivering, I think a bull-case target of 9,000 isn’t entirely out of the question.
Is it a vast acceleration in the pace of gains?
Most definitely. But that’s how bubbles form. And if we’re on the road to bubble territory, perhaps there’s going to be a big growth spurt in the S&P before things take a turn for the worse. In any case, Emanuel sees a risk of a nearer-term correction in the cards, with the S&P 500 at risk of retracing back to 6,250 by year’s end, representing a 4% dip in around four months.
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