The 2026 stock market year is expected to be one with very solid returns even though the second half of the year will likely struggle to match the exceptionally strong returns from the first half.
Several factors point to a turbulent fall in the stock market, including interest rates, the midterm elections, and geopolitical turmoil.
That’s the assessment of Tine Choi Danielsen, chief strategist at the pension company PFA.
She writes in a comment on Tuesdayt that interest rates will continue to be among the most important drivers of the stock market, with investors reacting to new inflation and labor market data this fall. If inflation proves more persistent than expected, central banks may be forced to keep interest rates high for a longer period of time.
“Interest rates are one of the things that will be exciting to follow this fall. Higher interest rates will typically put pressure on growth stocks and other companies where a large portion of expected earnings lies far into the future. Conversely, signals of lower interest rates could give stocks a new boost if the economy simultaneously avoids a sharp slowdown,” says Danielsen.
At the same time, attention is focused on the US midterm elections on November 3 where uncertainty could affect markets even before Election Day, as opinion polls, candidates’ economic proposals, and new trade policy announcements are priced in.
The midterm elections could have implications for US fiscal policy, including taxes, public investment, tariff rates, and investment in US companies.
“The Federal Reserve’s interest rate meeting is less than a week before the midterm elections, which makes the calendar particularly sensitive. Investors will therefore be watching to see if the central bank changes its rhetoric and if political statements trigger new fluctuations in interest rates and the dollar,” adds Danielsen.
Conflicts take center stage
In conclusion, the chief strategist points out that stocks, interest rates, and energy prices can all be rapidly affected by conflicts and tensions in the global economy. Conflicts in the Middle East and trade policy challenges have already sent shockwaves through the market in 2026.
“Visibility is very low right now due to uncertainty about the duration of the conflict. It’s simply foggy when we look out the windshield. That said, we expect 2026 to be a year with really solid returns,” says Tine Choi Danielsen, adding that there is potential for further returns this year, even though it will be difficult to match the returns from the first half of the year.
English edit by Christian Radich Hoffman
