Shares move higher
Nvidia shares moved higher as markets opened for the first trading session of 2026. The stock rose about 1.8% in pre-market trading, showing early confidence among investors. The gain followed a strong finish to 2025 for US stocks, led by technology and growth companies. Nvidia was one of the top-performing stocks last year due to heavy demand for AI chips.
Major indexes' 2025
Major US indexes ended 2025 with solid gains. The S&P 500, Dow Jones Industrial Average, and Nasdaq all posted double-digit returns. This marked the third straight year of gains for the indexes, a run last seen between 2019 and 2021. The Dow Jones also recorded its eighth straight monthly gain at the end of 2025. This was its longest such streak since 2017 to 2018. Many investors believe this momentum could continue into 2026 if economic conditions stay stable.
Expectations for 2026
Most professional investors expect the US economy to grow at a slow but steady pace in 2026. They believe a recession can be avoided. A stable economy usually helps companies grow profits, which supports stock prices over time. According to FactSet, analysts expect earnings per share for companies in the S&P 500 to rise by 14.5% in 2026. This would be higher than the estimated 12.1% growth seen in 2025.
Prices rise faster than profits
Despite the positive outlook, some concerns from last year continue. One major worry is whether large investments in AI will lead to enough profits and productivity gains. Companies like Nvidia and Broadcom benefited greatly from AI spending in 2025, but investors are now watching for clear returns. High stock prices across the market are another concern. In many cases, prices have risen faster than profits. Vanguard estimates that US stocks may deliver annual returns of only 3.5% to 5.5% over the next 10 years.
Limits
Some market experts expect stock prices to rise more slowly than earnings in 2026. Bank of America strategist Savita Subramanian said the S&P 500 could gain less than half the pace of profit growth this year. She pointed to lower stock buybacks and fewer interest rate cuts by central banks as possible reasons.
