3 things we (and markets) are grateful for this season
J.P. Morgan Wealth Management
Giving thanks to investor opportunities
As we head into Thanksgiving week, there’s plenty on investors’ plates. But despite headlines that often spotlight the risks, the market narrative heading into 2026 is being carried by several powerful forces that continue to push growth and innovation forward. We’re thankful for three major dynamics creating meaningful opportunity for investors as we look toward 2026: a broad-based “everything rally,” underlying economic durability and a powerful innovation cycle led by artificial intelligence (AI).
The “everything rally”
2025 has seen gains across nearly all major asset classes. Gold has led, fueled by geopolitical uncertainty and easier financial conditions, followed by ex-U.S. equities, then U.S. stocks – driven by technology, financials and more recently, cyclicals and small caps.
The “everything rally”
This “everything rally” reflects a rare alignment: Equity markets are hitting new (AI-fueled) highs while interest rates are easing as the Federal Reserve (Fed) pursues “insurance” cuts – even as structural risks persist. Geopolitics, immigration, Fed independence, high valuations and AI bubble concerns remain key risks we’re watching closely. However, this alignment provides a uniquely constructive environment. Rather than being forced to place a big bet on one part of the market, investors have flexibility – they can engage across asset classes, sectors and geographies, making portfolio diversification more effective.
This backdrop is a reminder to revisit cash positions. Lower rates and improving earnings expectations stand to support equities and credit, while falling yields and a softer U.S. dollar continue to benefit nonyielding assets like gold. Risks remain, but for now, investors appear more comfortable navigating an uncomfortable backdrop.
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Economic durability
The U.S. economy has had a lot to contend with in 2025. Early in the year, tariffs rose to their highest levels in nearly a century and the odds of a recession doubled. Just as trade uncertainty began to ease, increased conflict in the Middle East triggered more turmoil. On top of that, the U.S. only recently emerged from the longest government shutdown ever, disrupting essential services and clouding the outlook for investors.
Thankfully, shock absorbers throughout the economy have held off overly damaging outcomes. Companies could absorb some higher tariff costs thanks to strong profit margins. The labor market cooled, but it did so gradually and without a spike in layoffs. In September, unemployment rose to 4.4%, but job growth that month was twice what economists expected. The job market bent but didn’t break, and we expect it to stabilize and improve in 2026 as the Fed continues to cut rates.
The economy has weathered multiple shocks and is still on its feet. During the spring’s trade uncertainty, economists predicted gross domestic product (GDP) would grow just 1.4% in 2025, down from 2.8% in 2024. Since then, forecasts have steadily improved, with the consensus now at 1.9% growth. Consumer spending, the backbone of the economy, has also held up better than expected. In fact, holiday spending is expected to exceed $1 trillion this season and set a record, closing out a bumpy year on a high note.
The economy fared better than analysts had predicted
The AI innovation cycle
As we look ahead, we’re thankful for the AI innovation cycle – not just for the returns it’s delivered but for the new frontiers it’s opening. It’s a powerful reminder that even in a world of uncertainty and change, innovation can create lasting value and opportunity. Here’s why we – and the markets – are grateful for the AI innovation cycle:
- AI is powering real results. Since the launch of ChatGPT in late 2022, AI-related stocks have been responsible for roughly 75% of S&P 500 total returns, 80% of earnings growth and 90% of capital spending growth. That means AI is more than just hype – it is delivering tangible results, boosting productivity and supporting corporate margins across the economy.
- We’re still in the early innings. U.S. tech giants are projected to spend around $500 billion annually on AI-related capital expenditures by 2026, up from roughly $150 billion in 2023. Our investment bank highlights that the global data center and AI buildout could cost over $5 trillion – and some estimates are as high as $7 trillion – making it a major force in business investment and capital spending. Additionally, as tech companies remain private for longer and grow larger, private markets – where tomorrow’s leaders are built – offer a compelling way to access early innovation.
- AI’s reach goes far beyond Silicon Valley. The innovation cycle is fueling a multi-industry renaissance – transforming not just technology but also parts of the market like health care, energy, logistics and manufacturing. The buildout of data centers and supporting infrastructure is now one of the most important sources of U.S. capital spending growth, with ripple effects across power markets, real estate, networking, heating, ventilation and air conditioning (HVAC) and semiconductors. This supports our view that the AI trade has broadened out and that investors should be looking across the entire ecosystem for the companies providing the power, physical and digital infrastructure, and applications of the technology to keep pace with its evolution. We recommend doing so with an eye toward diversification. Think globally and across sectors.
As we head into Thanksgiving, we know there’s much to be grateful for – both in and beyond the markets. Looking ahead to 2026, our outlook is shaped by both Promise and Pressure the promise of innovation, resilience and new opportunities, and the pressure of a fragmenting world order and more volatile inflation. We remain optimistic about what’s possible, and we’re committed to helping you make the most of it.
Bonus! We’re also thankful for…
Family. Friends. Our colleagues. Chocolate. J.P. Morgan’s Long-Term Capital Market Assumptions. Coffee. Gold. Central Park. Dogs. And the bears for letting us buy the dips.
Above all, we’re grateful for the trust you place in us at J.P. Morgan and for joining us on this journey by reading Top Market Takeaways throughout the year. Wishing you and your loved ones a wonderful Thanksgiving.
All market and economic data as of 11/26/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.
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