The stock market has seen its share of tumult in 2025. Markets whipsawed in reaction to President Donald Trump’s tariffs in April, only to bounce back and experience growth.
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Despite the uptick, investors may be nervous as they wonder what’s in store for stocks in 2026. Many experts see a mix of opportunities and risks for the stock market next year.
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Interest rates have been in the headlines this year, with rates being lowered in September. The Federal Open Market Committee (FOMC) anticipates two more rate cuts this year, according to Yahoo Finance, which may spur activity into 2026. Unemployment rates are key to watch here for 2026.
“With unemployment rising, the Fed will probably set monetary policy to address unemployment and cut interest rates,” said Stephen Callahan, trading behavior specialist at Firstrade.
Lowering rates can help boost stocks, but it’s not a guarantee, so investors may need to brace for heightened risk. “A sharp correction in 2026 wouldn’t surprise me, especially if rate cuts fail to stimulate real growth or if inflation expectations become unanchored,” said John Murillo, chief business officer of B2BROKER.
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Inflationary pressures have been a significant challenge for many Americans in recent years. The FOMC, in part, reduces rates to counter that, but that alone may not be enough, and inflation may continue to remain stubborn.
“We believe the 2026 inflation rate will be higher than this year, which would erode consumer purchasing power and weight on consumer spending,” Callahan said.
Tariffs may make matters worse. “On top of this, we assume that tariff rates will remain elevated, which will also result in higher inflation and could become…
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