Tom Lee expects another strong year for stocks in 2026. The head of research at Fundstrat sees the S & P 500 rising to 7,700 next year, extending the bull market to a fourth year. That implies a gain of 11.8% from Wednesday’s close. “After 3 years > 20% yearly gains, bull market still alive,” Lee wrote in a note to clients. “The significant ‘Wall of Worry’ is a tailwind for bull market.” Stocks have indeed climbed a so-called wall of worry in recent years, as companies active in artificial intelligence drove huge gains, even as concerns around persistent inflation and a softer labor market grew. .SPX YTD mountain SPX year to date The S & P 500 this year is up 17%. Communication services and tech, home to the “Magnificent Seven” stocks, have surged 33% and 27%, respectively, in 2025. The benchmark closed at 6,886.68 on Wednesday, exceeding Lee’s 6,600 forecast for 2025 . For next year, Lee continues to like tech — specifically stocks tied to AI and crypto — along with materials, energy and financials. The S & P 500 materials sector has lagged this year, up just 5%. Energy has gained 7% in 2025, while financials have climbed 11.2%. Lee also pointed to a new Federal Reserve chair replacing Jerome Powell when his term is up next May as a potential boost for stocks. “New Fed = dovish policy = positive for stocks in 2H,” he wrote, adding that “fed futures [are] not pricing in ‘new dovish Fed.'”
