Summary

• I expect the S&P 500 to climb higher in 2026, driven by solid economic fundamentals and robust corporate earnings.
• Exceptional Q1 2026 earnings, especially in technology, and strong AI-driven CAPEX support my bullish outlook for continued double-digit market gains.
• Monetary policy appears neutral, with no further Fed cuts expected in 2026; inflation risks remain but are largely priced in.
• I favor selective technology exposure, especially semiconductors, over traditional software names threatened by AI disruption.

Introduction

After the market recovered in record time after a 9% drop driven by the Iran war, I believe we are ready to reach new highs on the S&P 500 (SP500). It was one of the quickest recoveries in 36 years.

The conflict in the Middle East, which began with the US attack on February 28, drove stock prices down, while oil prices reached a high of $115 on April 6. But we, as investors, have adapted to volatility, as well as to the constant announcements from Donald Trump, who declared the war was over.

The first time he declared in that way was March 9th, when he said Iran was running out of military forces to fight back. Crude oil prices sharply declined that day. I remember buying the US Oil Fund ETF (USO) days before, and I was very surprised when I saw such a sharp drop in my portfolio. Oil entered a cycle of high volatility, but in April my outlook changed. I sold my USO shares at the end of March with a moderate profit and positioned my portfolio for the end of the war, maintaining my investment style and resuming my long-term projections.

I believe the end of the war is already priced in by the market. But this doesn't mean the war has actually ended. But Trump's posts on X seem to age so quickly that the market no longer reacts to them the way it once did. This dynamic became more pronounced since April 8th, when the first ceasefire was confirmed, which was later followed by Iran's announcement of the opening of the Strait of Hormuz. I think VIX clearly shows this turning point, as it hasn't exceeded 20 points since then. From that volatility drop, the S&P 500 got back to all-time highs, reaching

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT, CLS, TSLA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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