We believe the S&P 500 has been in a Santa Claus rally since it bottomed on November 20 at 6538 (chart). It is up 4.5% since then through Friday's close. Over the past 10 years, the average increase in the S&P 500 from the start of November through the end of the year has added 4.5 percentage points to its return.
The S&P 500 is up 16.2% ytd. It is on track to be the third consecutive year of double-digit gains (chart). We expect another earnings-led 10%+ increase in 2026 to 7700 for the S&P 500.
During the week of December 12, industry analysts' consensus estimates for S&P 500 earnings per share for 2025, 2026, and 2027 were $272, $312, and $358 (chart). They expect a 14.7% increase in earnings next year and 14.6% in 2027. Our estimates for the next two years are similar at $310 and $350.
