Fortune Says 15 Banks See a Volatile Year Ahead for Markets

Wall Street analysts are increasingly describing 2026 with a single word: volatile. Fortune magazine reached this conclusion after analyzing forecasts from 15 major global banks using the Perplexity AI model to distill their outlooks into one defining theme.

According to the analysis, banks view 2026 as a mix of powerful long-term trends and growing structural vulnerabilities. Markets appear resilient on the surface, but that strength depends on a narrow set of conditions, while risks continue to build across geopolitical, monetary, and valuation fronts.

Major US stock indexes: the S&P 500, Dow Jones Industrial Average, and Nasdaq ended 2025 with solid gains despite trade disputes, inflation pressures, and persistent concerns about asset bubbles. Many analysts expect momentum to carry into 2026, supported in part by fiscal stimulus from the One Big Beautiful Bill Act, which the US Senate approved in July.

Still, optimism is increasingly concentrated. For many strategists, the market’s confidence rests largely on one factor: artificial intelligence.

AI Optimism Meets the Risk of Overheating

Artificial intelligence is emerging as both a driver of growth and a source of instability. In a note titled Promise and Pressure, JPMorgan Wealth Management CEO Christine Lemko said AI is expected to reshape industries and investment opportunities by 2026, but warned that enthusiasm may be running ahead of fundamentals.

JPMorgan estimates that Big Tech’s annual capital spending has surged from roughly $150 billion in 2023 to a projected $500 billion by 2026. Nearly 40% of the S&P 500’s market capitalization is now tied directly or indirectly to expectations around AI-driven growth.

While comparisons to the dot-com era are inevitable, JPMorgan argues the situation is not yet extreme. The bank tracks five indicators of speculative excess and says none are currently flashing red. Analysts note that investor euphoria is rising but has not yet reached levels that would trigger heightened caution.

At the same time, JPMorgan acknowledges that many of the ingredients for a future market bubble are in place. The firm believes the risk of a bubble forming later is greater than the risk that markets have already peaked.

Macroeconomic Fault Lines Beneath the Surface

Beyond AI, broader economic forces add to the uncertain outlook. Deutsche Bank economists Jim Reid and Peter Sidorov point to political fragmentation in Europe and the potential for renewed US-China tensions following the end of a year-long trade truce. They also warn that recession risks are elevated due to a fragile labor market.

The US economy continues to show weak job growth, while the unemployment rate remains stable largely because the labor force is shrinking. Macquarie Chief Economist David Doyle describes the situation as a delicate balance, noting that even a modest acceleration in layoffs could push unemployment higher.

Goldman Sachs shares that concern. Chief economist Jan Hatzius identifies the labor market as the economy’s primary vulnerability, saying that while a recession may be avoided, it remains too early to rule one out.

These dynamics are also shaping Federal Reserve policy. Despite inflation remaining above the 2% target, signs of labor market weakness gave the Fed room to cut interest rates. Bank of America forecasts core inflation of 2.8% by the end of 2026 and 2.4% by the end of 2027, with short-term pressure coming from tariffs and temporary factors, including price adjustments linked to the men’s World Cup.

Consumers and a K-Shaped Recovery

After the pandemic, US consumers surprised economists with their resilience. By late 2025, however, a K-shaped economy is becoming more evident. Moody’s Analytics chief economist Mark Zandi says wealthier households continue to strengthen their finances, while roughly half of Americans are living paycheck to paycheck.

Despite these pressures, overall sentiment on Wall Street remains cautiously optimistic. Vanguard notes that economies have held up through rising tariffs, a plateau in labor supply, and slowing growth. Still, Deutsche Bank cautions that investors should not expect calm markets, warning that sharp swings in sentiment are likely in 2026.