The economy is stable as 2025 ends, with the S&P 500 up over 15% and inflation relatively low. Despite this, Americans hold gloomy views on inflation, politics, and the job market. Analysts predict a healthy economy and stock market in 2026, with the S&P 500 expected to rise between 8-18%.

AI spending, Federal Reserve rate cuts, and tax breaks are expected to drive the stock market in 2026. Professional investors are cautious about AI’s impact on the economy and stock market, anticipating both benefits and risks. The market’s performance has been concentrated in a few high-growth tech stocks in recent years.

Investors are shifting focus towards industrial-sector companies benefiting from the AI boom, signaling a healthier market. Truist Wealth upgraded the industrial sector for investment, along with remaining bullish on the information technology sector. Goldman Sachs recommends diversifying investments outside the U.S. and into emerging markets and various sectors.

Sustainable, responsible impact investing is an emerging theme, highlighting the need for resilient infrastructure. Goldman Sachs advises investors to “stay invested” for long-term success in financial markets. Staying the course generally yields better results than trying to time the market, as markets can be volatile.

Read more at Yahoo Finance: What will the stock market do in 2026? It’s not just about AI.