Happy Monday, investors. Big banks are starting to roll out year-ahead price targets for the S&P 500 and, unsurprisingly, they all hover around the historical average return.

Yet the data suggest “average” almost never happens.

Wall Street predicts an average year for the stock market in 2026, as usual. 

Among the 13 firms that have published year-ahead forecasts so far, the average estimate for the index is 7,596, which represents about a 10.5% gain from current levels. 

Bank of America maintains the weakest S&P 500 target of 7,100 for about a 3% gain.

Meanwhile Deutsche Bank is the most optimistic with a forecast for 8,000, representing a 16% gain which would be roughly equal to what stocks have done so far this year. 

Financial author and analyst Sam Ro, who closely tracks Wall Street forecasts in his newsletter TKer each year, cautions against putting too much weight on these targets.

“​​It’s extremely difficult to predict short-term moves in the market with any accuracy,” Ro said.

“Few have ever been able to do this consistently. Also, the market rarely delivers an average return in a given year.”

Indeed, while the S&P 500 does return about 10% on average, most 12-month periods are either much higher or much lower than that round number. 

Knowing what stocks do each year, on average, is helpful to keep in mind for investors who plan to hold stocks for decades.

Otherwise, using annual forecasts to move in and out of trades isn’t altogether productive. 

As it turns out, there have actually been only six instances where the S&P 500 returned between 5% to 10% in a calendar year, reinforcing the idea that “average” rarely happens.

As far as Wall Street’s latest forecasts, most firms do expect continued economic growth — fueled by fiscal stimulus out of Washington — as well as more rate cuts from the Fed, more Big Tech spending on AI and sustained earnings strength. 

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📺 Regulators could interrupt Netflix’s deal to buy Warner Bros. Discovery. The acquisition of its streaming and film studio assets is for about $72 billion, though industry watchdogs could request changes. The White House is reportedly skeptical on the deal, too. (CNBC)

📊 Investors are feeling good about stocks now. Anxiety has given way for optimism as markets begin to price in strong economic growth, a broadening out beyond the tech sector, and falling inflation expectations. (WSJ)

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🗓December 8, 1941: US markets reopened the day after the Pearl Harbor attacks, and the Dow Jones Industrial Average dropped 3.5% as wartime jitters hit stock prices.

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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

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