Corporate profits and falling interest rates may be enough to lift the S&P 500 to a fourth-straight year of gains, the longest such streak in nearly two decades.

Wall Street is betting that falling interest rates and strong corporate earnings will be enough to eke out yet one more year of stock-market gains. It’s going to be close.

After posting double-digit percentage increases for three straight years, from 2023 through 2025, the S&P 500 and other major U.S. indexes enter year four of their rally with stretched valuations on many big stocks and a cloudier economic picture. There are enough positives to give investors and analysts hope, but some worry there isn’t enough to keep up the pace of 2025.

“We probably have an OK market, but certainly not what we’ve seen in the last couple years,” said Mark Hackett, chief market strategist at Nationwide.

The S&P 500 surged 16% last year, with a resilient economy, renewed interest-rate cuts and artificial-intelligence fervor propelling the benchmark index to 39 records. The Dow Jones Industrial Average gained 13% while the Nasdaq composite jumped 20%.

Wall Street analysts and strategists have predicted the party will continue in 2026. Bank of America expects the S&P 500 to reach 7,100 by the end of this year, a 3.7% gain from the 2025 closing level. JPMorgan Chase and Goldman Sachs expect the benchmark index to reach 7,500 and 7,600, respectively.

Their bullishness, in light of the past gains, is reason enough to be cautious, some investors said. The S&P 500 surged roughly 80% from the start of 2023 through New Year’s Eve, a torrid pace that will be hard to maintain under most circumstances, they said. 

“It behooves investors to at least offer a little skepticism when there is such a broad consensus that everything will go well,” said Steve Sosnick, chief strategist at Interactive Brokers.

The current rally is getting old, at least compared with past market cycles. Should the S&P 500 rise in 2026 for a fourth-consecutive year, it would be the longest such streak since 2007, when the benchmark completed a five-year run. In the index’s history, there have only been five streaks of four or more consecutive years of gains, according to Dow Jones Market Data.

In the coming days, investors will get their next look at the economy’s health from the December jobs report. Companies will also begin reporting earnings soon, with results from big banks including JPMorgan Chase, Wells Fargo and Citigroup due in the next few weeks.

The 2025 rally swept across more than just stocks. Gold and silver had their best year since 1979, while bonds saw their best showing since 2020. A fresh wave of speculation among individual investors spawned a new class of meme stocks and helped drive options trading volumes to records again.

One expected boon for the market this year is lower interest rates. The Federal Reserve penciled in one quarter-point cut for this year, and some expect that President Trump’s pick for the next Fed chair after Jerome Powell’s term expires in May will lean more dovish. Tax cuts are also poised to boost corporate coffers.

Yet, there are also signs that prices have run up too far, too fast. The price of bitcoin finished last year below $88,000 after sliding more than 30% from its record above $126,000 set in early October. Many of the meme stocks that saw huge swings higher have come down just as quickly. 

Some analysts are also concerned that the huge gains in artificial-intelligence stocks, which have fueled much of the market’s gains over the past three years, have limited room to run further. While many believe that AI will be a transformative technology for the economy, they fret that the promised returns on multibillion-dollar investments between the major AI players will be difficult to realize, potentially weighing on future gains.

Stock valuations are looking rich, too. Companies in the S&P 500 are trading at 22 times their expected earnings over the next 12 months, above their 10-year average of 19 times. Around half of the valuation metrics for the S&P 500 tracked by Bank of America are higher than levels seen in March 2000, near when the dot-com bubble burst.

Many expect that the economy will continue to hold up and provide fresh fuel for the stock rally. The U.S. economy remained resilient last year despite Trump’s tariffs, persistent inflation and immigration shocks, with Americans continuing to spend and businesses continuing to invest mammoth amounts in data centers and other critical parts of AI infrastructure.

Corporate earnings growth is expected to remain robust. Analysts polled by FactSet expect companies in the S&P 500 to report a 15% jump in profits this year, which would mark the highest annual rate of growth since 2021.

“The base case is one in which there is sufficient momentum in the economy,” said Mark Luschini, chief investment strategist at Janney Capital Management.