- Multiple analysts, including Goldman Sachs and JPMorgan are predicting strong earnings to continue in 2026
- Investments in AI are proving worthwhile, calming nerves over bubble burst
- Key risks include geopolitical pressures, a hawkish Federal Reserve and economic slowdown
The S&P 500 has shown impressive strength, trending upward since mid-April 2025 and hitting record after record. On January 15, 2026, it closed at 6,944.47, a 0.96% gain so far this year. This makes you wonder what’s keeping this going and if it can last through 2026.
Factors Fueling the Momentum
Renewed enthusiasm in artificial intelligence has been a primary catalyst for the upward momentum, driving gains in technology stocks and broadening market participation. However, it’s not just a “tech-only” story anymore.
Around late 2025, experts at JPMorgan and Goldman Sachs noted that more sectors, like financials and healthcare, started showing significant growth, too. Overall, the US economy did better than expected last year. Plus, the Federal Reserve lowered interest rates three times in 2025, which helped the situation by making money easier to get.
Is 7,000 Points Support Tenable for S&P 500 In 2026?
The index’s proximity to 7,000, currently at 6,944, positions it well for this milestone in early 2026, provided momentum holds. One could anticipate that if the Federal Reserve maintains accommodative policies and corporate earnings deliver, the uptrend may persist.
Analysts forecast earnings will grow by about 13-15%, which is better than in 2025 and should help the market, according to J.P. Morgan Asset Management. LPL Financial says the average target for the end of the year is around 7,269, which is about 6% higher than where it closed in late 2025. But Vanguard warns that there are growing dangers, especially in areas where values are too high. This suggests we should be careful but hopeful.
Key Risks Ahead
Despite the good news, there are weak spots. High valuations make the index sensitive to any bad news about company earnings or if the AI trend fades, because the index is so top-heavy, if a big company like Apple or Nvidia does poorly, it could pull down the whole market.
Geopolitical risks, changes in Federal Reserve policy, and worries about a recession could also disrupt the current momentum. And if the economy slows down, the upward trend could reverse, so it’s important to stay aware.
S&P 500 Forecast
The S&P 500 Index RSI is above 50, which confirms a positive trend without being overbought. It’s pivoting at the 10-day SMA at 6,933 and trading above its 50-day SMA, which is about 6,826. The key resistance levels are at 6,980-7,000. On the downside, there’s support at 6,900, below which further losses could take the action to test 6,845.
S&P 500 Index daily chart with key support and resistance levels for January 16, 2026. Created on TradingView
Enthusiasm for AI, Federal Reserve rate cuts, good economic growth, and strong company earnings turned early-year losses into big gains.
Elevated valuations, AI bubble concerns, earnings misses, geopolitical tensions, and potential Fed tightening could introduce volatility and reversals.
Although valuations are high, most experts say it’s not a bubble because the price increases are supported by record company earnings and huge investments in AI that are bringing in revenue.