US stock market prediction 2026: Stock market outlook 2026: JPMorgan says retail investors will drive next big rally – here’s what you need to know

US stock market prediction 2026: Retail investors are showing no signs of slowing down, and JPMorgan Chase believes their momentum could carry well into 2026. The bank said in a client note, individual investors have put nearly $160 billion into stock-based ETFs in September and October, marking the fastest pace of inflows since last year’s post-election surge, as per a report.

JPMorgan Chase: Retail Investors Driving Stock Market Rally Into 2026

While hedge funds and pension managers warn of AI bubbles and high valuations, everyday investors seem unfazed, they continue buying dips and chasing gains, keeping the markets moving and Wall Street on its toes, as per The Street report.

Record ETF Inflows Show Strength of Retail Investors

The ETF numbers underscore this retail-driven trend:

• US-listed ETFs pulled in $175.6 billion in October, according to FactSet/ETF.com, while Morningstar reported $166 billion, as per The Street report.
• September saw $141.2 billion in ETF inflows, as per the report.
• By mid-October, ETF inflows for 2025 had already topped $1 trillion, on pace for $1.4 trillion by year-end, as per The Street report.
• JPMorgan also points out that December and the first quarter historically see above-average ETF and retail flows, suggesting the current momentum could extend into early 2026, as per The Street report.

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Retail Investors vs Wall Street: Who’s Leading the Market

However, not everyone is riding the retail wave. Many seasoned investors are stepping back:

• A Bank of America survey found 54% of fund managers believe AI stocks are in a bubble, and 60% say equities are overvalued, as per The Street report.
• The S&P 500’s forward P/E ratio stands between 22.4–22.9, above both its five-year (19.9) and ten-year (18.6) averages, as per the report.
• Warren Buffett has been a net seller for multiple quarters, building a $382 billion cash pile at Berkshire Hathaway and selling $6.1 billion in Q3 alone, as per The Street report.
• Stanley Druckenmiller has exited Nvidia and Palantir, selling NVDA in Q3 2024 and wrapping up PLTR by early 2025, as per the report.
• Corporate boards remain cautious, factoring trade and policy risks into their decisions after April’s tariff-driven selloff and the rapid June rebound, as per The Street report.

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FAQs

Are retail investors still buying stocks in 2025?

Yes, they put nearly $160 billion into stock-based ETFs in September and October alone.

How overvalued is the S&P 500?

Its forward P/E ratio is between 22.4–22.9, above its five-year and ten-year averages.