Where will U.S. stocks go in the second half of the year? Wall Street is generally optimistic about the rise, but be wary of "hot commodities" such as AI and semiconductors!
[Where will U.S. stocks go in the second half of the year? Wall Street is generally optimistic about the rise, but be wary of "hot commodities" such as AI and semiconductors! ] According to a summary report from investment consulting firm Yardeni Research, Wall Street strategists are still generally optimistic about the U.S. stock market for the remainder of 2026. According to FactSet data, industry analysts on average predict that the S&P 500 Index will rise 21% in the next 12 months.
The strong performance of U.S. stocks last quarter has Wall Street optimistic about further gains in the second half of the year. As background, in the second quarter of this year, the S&P rose by 14.87% and the Nasdaq rose by 21.41%. The last time these two indexes recorded such performance was six years ago (i.e., in the second quarter of 2020); the Dow Jones Industrial Average rose by 12.9%, the largest increase in 14 quarters. In the first half of this year, the Dow Jones Industrial Average rose 8.85%, its best first half performance since 2021. The S&P rose 9.55% and the Nasdaq rose 12.79%. The Russell 2000 Index also performed well, with an increase of 21.86%, its best performance since 1991. "I think there are far more things to be excited about than there are things to worry about," said Ross Mayfield, investment strategist at Baird. He pointed to lower oil and gasoline prices after the U.S. and Iran stopped fighting, as well as the resilience of the Nasdaq Composite and S&P 500 as a boost to the economy. "A lot of factors are at play. This is a bull market driven by earnings and liquidity, and those factors can allow the bull market to continue into the second half of this year and, in my opinion, probably into 2027," he added. Wall Street strategists remain generally optimistic about the U.S. stock market for the remainder of 2026, according to a summary report from investment advisory firm Yardeni Research. According to FactSet data, industry analysts on average predict that the S&P 500 Index will rise 21% in the next 12 months. Among the companies it tracks, Yardeni Research itself is the most bullish on the S&P 500, with a year-end price target of 8,250. That represents about 10% upside from the index's recent level near 7,483. Oppenheimer and Citigroup are the next two most optimistic institutions, both predicting the benchmark index will reach 8,100 points by the end of the year, followed by 22V Research, with a target price of 8,060 points. Deutsche Bank, Goldman Sachs and Morgan Stanley all have year-end targets of 8,000. JPMorgan analysts recently raised their year-end forecast to 7,800. The average price target given by the companies surveyed is 7,716, which implies about 3% upside from current levels. Of course, there are also more cautious institutions on Wall Street. Stifel, Nicolaus & Company has the lowest target price of 7,000 points, which means that the S&P 500 Index will fall by about 6% by the end of the year. Bank of America's forecast is more conservative at 7,100 points, while Societe Generale and Wells Fargo both predict that the S&P 500 will close at 7,300 points by the end of the year. UBS gave an "almost flat price target" of 7,500 points. Overall, Yardeni Research reports that the forecast distribution suggests that strategists still expect the broader market to rise before the end of the year, although the consensus is that the gains will be more modest than the previous strong advance that propelled the S&P 500 to a record high in 2026. Dan Ives, senior equity research analyst at Wedbush Securities, said: “As the earnings season begins in July, we must pay attention to the verification and monetization of artificial intelligence.” Despite the upbeat sentiment, strategists are warning against rushing into memory and chipmakers whose shares have soared in recent months after the Philadelphia Semiconductor Index (SOX) posted its best quarter ever. "I would be cautious, you know...parabolic charts rarely correct sideways," Mayfield said. Concerns over lavish spending by some big tech companies have also raised questions about some of the "Big Seven" companies, which have historically been known for their strong free cash flow generation. Ed Yardeni, a Wall Street veteran and founder of Yardeni Research, noted that investors are “questioning whether hyperscale data center operators’ huge investments in AI infrastructure will ultimately pay off.” This iconic group of stocks has been underperforming compared to the booming semiconductor industry.
“We are in the middle stages of artificial intelligence trading,” Omar Aguilar, CEO and chief investment officer of Charles Schwab Asset Management, said last week. He emphasized the need to diversify investments and reduce overweighting of large-cap stocks. He added: "We are very fond of areas such as industrials, healthcare, materials, etc., which are just starting to truly leverage AI architecture. Investment opportunities also exist in small and mid-cap companies as well as international equities." (
“We are in the middle stages of artificial intelligence trading,” Omar Aguilar, CEO and chief investment officer of Charles Schwab Asset Management, said last week. He emphasized the need to diversify investments and reduce overweighting of large-cap stocks. He added: "We are very fond of areas such as industrials, healthcare, materials, etc., which are just starting to truly leverage AI architecture. Investment opportunities also exist in small and mid-cap companies as well as international equities." (