Schwab Center for Financial Research Releases 2026 Mid-Year Market Outlook
Key Takeaways:
- U.S. stocks and economic growth will likely continue to be supported by strong business investment, while consumer spending faces persistent headwinds if the war persists and keeps upward pressure on inflation.
- The bond market outlook suggests that investors remain selective, favoring short- and intermediate-term maturities versus long-duration investments.
- The global equity market outlook remains positive, driven by ongoing economic expansion and strong earnings growth, but higher inflation, geopolitical turmoil, and market concentration present potential risks.
The Schwab Center for Financial Research (SCFR), which provides top-quality research, timely market insights and practical guidance for investors, today announced the release of its 2026 mid-year outlook, Schwab Market Perspective: Mid-Year Outlook, which delivers insights on the most important market and economic trends that investors should consider for the second half of the year.
The Schwab Market Perspective: Mid-Year Outlook provides perspectives on U.S. stocks and the U.S. economy, taxable fixed income, and global equities.
"Considering the interplay between economic trends and stock market behavior, the second half of 2026 is presenting investors with a bit of a split verdict. The earnings backdrop is the strongest it has been in years and although it is concentrated, it is not a mirage. The economy and labor market have remained resilient. However, the index-level signal from the stock market is obscuring a more complicated picture: concentrated earnings growth, record household equity exposure, consumer sentiment at historical lows for everyone outside the stock market, and a bond market that's increasingly competitive with equities on a risk-adjusted basis."
Liz Ann Sonders, Chief Investment Strategist, and Kevin Gordon, Head of Macro Research and Strategy, Schwab Center for Financial Research |
"Our broad message for the second half of 2026 is this: Income still matters, but investors should be selective. Despite the recent rise in Treasury yields, we suggest investors favor a below-benchmark average duration with their bond holdings, favoring short- and intermediate-term maturities. In our view, now is not the time to favor long-duration investments just yet."
Collin Martin, Head of Fixed Income Research and Strategy, Schwab Center for Financial Research |
"In 2026, economic activity has improved. Earnings growth continues to be strong. Capital investment remains robust. Financial conditions are relatively benign. But those strengths are concentrated, and they exist within a shifting structural regime that could produce ongoing geopolitical pressures and increased inflation risks over the longer term."
Chris Ferrarone, Head of Equity Research and Strategy, and Michelle Gibley, Director of International Equity Research and Strategy, Schwab Center for Financial Research |
Learn more about the Schwab Market Perspective: Mid-Year Outlook here.
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