Good morning, investors. I hope you had a restful Christmas. Markets re-open this morning and the Santa Rally is now underway. The S&P 500 hit a closing record-high the day before Christmas for just the fifth time in the last 75 years.
History suggests the next handful of trading days will bring more reason for cheer.
Bull and bear estimates
Wall Street is optimistic on the stock market once again for 2026.
Analysts’ bottom-up targets imply about 15% upside for the S&P 500 over the next year, according to FactSet, which analyzed industry price targets for each individual stock in the index to estimate where the whole market could land.
As usual, winners and losers emerge in the forecast.
The 10 companies with the largest gap between their median analyst target price and current share price imply that a small group will do much of the heavy lifting the coming 12 months, as the table below shows.
Notably, Oracle — which has emerged as a heat check for the AI trade in recent quarters — sits near the top of the index alongside names including Netflix and Coinbase.
To be clear, large upside estimates don’t necessarily signal high conviction. Rather they reflect how slowly expectations adjust relative to stock prices.
The same is true for wide gaps in bearish estimates.
Goldman Sachs and Southwest Airlines are among the stocks currently trading above their median analyst targets for 2026.
Still, history suggests that investors should treat both sides with caution.
Over the past two decades, Wall Street has overestimated the S&P 500’s year-ahead closing level by about 6% on average, per FactSet.
The two tables above aren’t clean bets on winners and losers for the year ahead.
Think of them instead as a snapshot of where expectations are most stretched and which names could see the greatest execution risk if fundamentals lag.
Market snapshot
Elsewhere
🚀 Nvidia made its biggest purchase ever. The company acquired assets from the chip company Groq for about $20 billion. It was founded by creators of Google’s TPU, which competes with Nvidia for AI workloads. (CNBC)
📊 The economy is booming. The US beat expectations in the third quarter with 4.3% GDP, the strongest growth in two years. Consumer spending rose 3.5% in the period, up from 2.5% the quarter prior. (WSJ)
Rapid-fire
Divisions at the Fed are expected to carry into 2026 as new leadership looms (Yahoo Finance)
US murder rates on pace for a 20% drop compared to a year ago, the largest drop on record (Axios)
How to invest in the AI economy, according to a top quant (Full Signal)
The AI race could push the Magnificent 7 to spend themselves into oblivion (Opening Bell Daily)
Copper prices are surging alongside gold and silver to end the year (Yahoo Finance)
Gold is set to notch its best year since Jimmy Carter was president (CNN)
Home sales have stalled under the weight of high prices and elevated mortgage rates (Investopedia)
Investors are paying more attention to which AI companies monetize first (CNBC)
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On this day
🗓 December 26, 1896: Charles Dow first published the Dow Jones Industrial Average tracking 12 industrial companies, marking the launch of the stock market benchmark we use to this day.
Last thing
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About me
📰 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.
I write our flagship newsletter and host our show, Full Signal, to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.
Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].