Equities: Resilient Economy Bolstered by Fiscal Stimulus Could Help Corporate America Hit Lofty Earnings Targets

The U.S. economy will benefit from fiscal policy support in 2026, notably the One Big Beautiful Bill Act (OBBBA). This legislation is expected to boost corporate profits and help corporate America sustain mid-single-digit revenue growth, while artificial intelligence (AI)-driven efficiencies could help lift margins. Together, these factors underpin forecasts for double-digit earnings growth, which will likely be a primary driver of stock prices given limited room for expansion in the price-to-earnings ratio (P/E) which is still over 22, even after the 2% pullback in the S&P 500 since its late-October record closing high. Given elevated valuations, corporate America’s ability to hit double-digit earnings growth targets next year will be a key factor for stock market performance in 2026.