In 2025, the stock market saw impressive gains, with the Dow Jones, S&P 500, and Nasdaq rising by 13% to 20%. Concerns for a potential crash in 2026 include Trump’s trade policy and the AI bubble. However, the biggest risk comes from division at the Federal Reserve, with historic implications for the market.

President Trump’s tariffs have impacted U.S. manufacturers, leading to increased costs and negative impacts on productivity and profits. The AI bubble is another concern, with Nvidia’s GPUs in high demand. However, the risk of a bubble burst remains high due to businesses not fully optimizing AI technology.

The Federal Reserve’s decisions on monetary policy pose the biggest risk for Wall Street in 2026. Recent rate cuts have led to dissenting opinions within the FOMC, signaling a divided central bank. The lack of clarity from the Fed could contribute to a potential bear market or crash in the new year.

Investors looking at the S&P 500 should be cautious, as the Fed’s actions, Trump’s policies, and the AI bubble present significant risks. The stock market’s stability hinges on the Federal Reserve’s ability to provide clear and effective guidance in the face of economic uncertainties.

Read more at NASDAQ: Forget President Donald Trump’s Tariffs and Talk of an AI Bubble — There’s a Far More Sinister Catalyst for a Stock Market Crash in 2026