This year has been quite the rollercoaster for the stock market. On both sides of the Atlantic, investors have been trying to navigate a cocktail of influences – from the artificial intelligence (AI) boom to a weaker US dollar and possible interest rate cuts.
Inflation, meanwhile, is expected to cool back to around 2%, offering some relief after two years of stubbornly high price pressures.
So where do analysts think it could go from here?
The US outlook
Across the pond, optimism is slowly building. UBS has just lifted its mid-2026 target for the S&P 500 to 6,800, up from 6,200. That said, the bank has kept its stance neutral, suggesting much of this expected upside might already be baked in.
Morgan Stanley envisions a recovery that could see the index reach 6,500 by mid-2026, with an optimistic high-end target of 7,200 – implying a potential 12% rally from current levels.
The UK outlook
Back at home, things are shaping up a little differently. Fidelity reckons markets may be stuck in a trading range for the rest of 2025. Dividends are forecast to rise by a modest 2% this year but it doesn’t expect a real recovery until 2026.
JPMorgan sees mid-teen growth in earnings per share (EPS), while Schroders is pencilling in gains of around 12%.
Vanguard is more restrained, projecting UK GDP growth of just 0.8% heading into 2026, with fiscal tightening and a softening labour market dragging on momentum. Still, falling interest rates – from 4% in 2025 down to an expected 3.25% by mid-2026 – could provide some relief for businesses and consumers.
Stocks to watch
Several familiar FTSE 100 names have been tipped to do well in the coming year. Games Workshop, NatWest, 3i Group, Rolls-Royce, BAE Systems, RELX, London Stock Exchange Group, and Halma all feature on analysts’ lists.
But one that really catches my eye is Tritax Big Box REIT (LSE: BBOX). This logistics landlord is moving into the data centre space and with AI adoption exploding, demand for digital infrastructure looks set to climb for years to come.
What I particularly like is its income potential. The shares currently offer a 5.7% yield, backed by 11 years of payments and four years of consecutive growth. Dividends are well-covered too, with payouts representing just 45% of earnings and a cash dividend coverage ratio of 1.05.
Of course, there are risks. As a real estate investment trust (REIT), Tritax Big Box remains exposed to UK property cycles and broader economic downturns. Plus, the nascent AI sector remains plagued with risks. If tighter regulations stifle demand, the company’s growth potential could slow dramatically.
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A promising option
Overall, analysts seem cautiously optimistic about where the stock market is heading in 2026. The AI boom is still in full swing, inflation is easing, and interest rates are falling. Against that backdrop, I think Tritax Big Box looks well placed to ride the digital wave – and pay a tidy income along the way.
While there are some risks, its financials look impressive. It has a net margin of 121% with earnings up 127% and revenue climbing 35% in the past 12 months. Add to that a healthy balance sheet with a debt-to-equity ratio of just 0.47 and it’s a stock worth considering in my opinion.
