Global Bull Stock Market 2025: Fed Cut Bets, AI Leaders and 2026 Forecasts
As of December 7, 2025, the bull market is alive, caffeinated, and making people a little jumpy. The S&P 500 closed the week near 6,870, up again and within reach of its October record. Year to date: S&P 500 roughly +16%, Nasdaq a bit over +20%. Global indexes are near highs too, helped by rising odds of a December Fed rate cut.
It's not a simple party. Valuations are stretched, leadership is narrow, and the 2026 outlooks come with asterisks. Still, the tape says "up," and most big houses think there's more room-if earnings, growth, and policy line up.
Where the bull stands now
This run started on October 12, 2022, when the S&P 500 bottomed near 3,577. Since then, the index is up about 83%. From that low through early December 2025, the 10 largest S&P stocks delivered about 175% total return, the S&P 500 overall roughly 100%, and the equal-weight S&P about 58%.
Translation: the bull is real, and concentrated. A tight group-NVIDIA, Apple, Microsoft, Alphabet, Amazon, Broadcom, Meta, Tesla, Berkshire Hathaway, and JPMorgan-has done the heavy lifting thanks to AI, cloud, and digital scale advantages.
Recent action backs the story. On December 5, the S&P 500 and Nasdaq booked a fourth straight gain into the coming Fed meeting, just shy of record highs. Globally, equities notched their strongest weekly move since May as easing hopes picked up.
Why stocks remain in bull mode
1) Rate-cut hopes: Futures have been pricing high odds of a December cut. Investors are leaning toward a "cuts without deep recession" setup-historically a friendly mix for equities.
2) Earnings support: UBS sees S&P 500 earnings rising about 11% in 2025 and 10% in 2026, with an index target of 7,300 by June 2026. RBC's 2026 view includes U.S. GDP near 2.2% and consensus profit growth around 11.6% in 2025 and 12.8% in 2026. Valuations are elevated (forward P/E near 21.3x vs ~18.6x 10-year average), but manageable if growth holds. Morningstar pegs U.S. equities near fair value, with value and small caps showing better breadth in November.
3) The AI engine: We're shifting from "AI 1.0" (infrastructure buildout) to "AI 2.0" (productivity and profit gains across sectors). Picks tied to chips, data centers, energy, biotech, and financials have been lining up near buy areas, while large-cap tech leaders remain the volume magnets.
What Wall Street expects for 2026
Most big desks are constructive-cautious, but pointed up. UBS targets 7,300 by June 2026. JPMorgan sees ~7,500 by year-end 2026, citing an AI supercycle with mid-teens profit growth. Morgan Stanley is around 7,800 by end-2026, calling for a rolling recovery, AI-driven productivity, and a supportive Fed. Others cluster in the 7,500-8,000 range.
RBC's tone is steadier. They see "enough potential catalysts" for 2026 if three things line up: solid growth, AI benefits spreading, and the market sidestepping the typical midterm-year drawdown. They begin 2026 market-weight U.S., with a tilt to dividend growth and health care.
The "most hated" bull
The rally is strong, but trust is scarce. The 2022 bear is still in investors' heads, and valuation warnings are everywhere. A forward P/E north of 21x is a yellow light, and AI could run into power, regulation, or slower capex. The consensus: bullish, not blind.
Where strength is widening
Mega-cap AI and tech: They remain the engine, but they've made indexes top-heavy. Several institutions are advising holders to check single-name and sector weights and trim back drift.
Small-cap revival: As rate-cut odds rise, small caps have shown signs of life. In a recent week, the Russell 2000 jumped 5.55% vs the S&P 500's 3.74%. Seasonal patterns favor small caps into year-end, and November's factor moves hint at broader participation.
Emerging markets and a softer dollar: A weaker dollar backdrop supports EM outperformance. Latin America stands out with strong year-to-date returns, and global ex-U.S. stocks have led in both local and dollar terms in 2025.
What could derail 2026
- Valuation and earnings risk: High multiples in AI-heavy leaders leave little cushion. If earnings miss mid-teens hopes, multiples can compress fast.
- Policy surprises: Markets assume multiple cuts into early 2026, then a pause. A growth re-acceleration could put hikes back on the table, pressuring both bonds and stocks.
- AI bottlenecks: Power constraints, circular financing, or slower capex could cool the story if profits don't match expectations.
- Macro and politics: Midterm-year corrections have averaged ~22%. Add trade, fiscal, or geopolitical shocks, and you have the recipe for a shakeout.
Practical playbook for investors
- Rebalance after big winners: Trim outsized positions and keep single-name and sector risk in check.
- Broaden exposure: Add to small caps, value, and non-U.S. areas that still trade at discounts.
- Follow profits, not headlines: Track revenue, margins, cash flow, and guidance. The 2026 case rests on earnings.
- Plan for sharper swings: A rising market with more volatility means pullbacks are part of the ride. Set ranges and stick to them.
- Align with your time horizon: Size equity risk to your cash needs and patience.
If your team is building an AI stack to capture "AI 2.0" productivity in finance workflows, these curated resources can help: AI tools for finance.
Bottom line
As of early December, this bull is powerful, narrow, and still doubted. Strategists cluster around 7,300-8,000 for the S&P 500 in 2026, but they attach conditions: earnings hold up, growth stays steady, and policy doesn't swerve. That's exactly why diversification, periodic rebalancing, and clear risk rules matter right now.
For a quick read on global markets near highs, see recent coverage from Reuters. For policy context as the Fed meeting approaches, the Federal Reserve site is your primary source.
Your membership also unlocks:
