Wall Street is optimistic as the S&P 500 and Dow hit record highs after the Federal Reserve cut interest rates. Chair Jerome Powell’s comments were less hawkish than expected. President Trump may replace Powell with someone who favors lower rates, leading to fiscal and monetary stimulus.

The Fed’s upward revision of GDP to 2.3% for 2026 is fueling bullish price targets. Strategists predict the S&P 500 could reach 7,700 or even 8,100 by December 2026 due to resilient economic growth and AI investment. Goldman Sachs forecasts S&P 500 earnings growth of over 12% in 2026.

The AI trade paused last week, but remains bullish. Analysts advise investors to be selective in the sector. Beyond tech, opportunities are emerging in transportation, homebuilders, healthcare, and energy. Strategists suggest looking within these sectors for growth opportunities.

Investors are hopeful for the stock market in 2026 due to anticipated looser monetary and fiscal policies. Ines Ferre, a Senior Business Reporter for Yahoo Finance, provides insights on market trends and events. Follow her on Twitter for more updates. For in-depth analysis of stock market news and financial updates, visit Yahoo Finance’s website.

Read more at Yahoo Finance: Wall Street optimistic on stock market rally in 2026 after Fed rate cut