Evan Simonoff

The stock market is seeing realignment as tech fatigue sets in and foreign markets beckon.

HEN 21 OUT OF 21 WALL STREET STRATEGISTS all issue upbeat forecasts for equities in 2026, advisors could be forgiven for cynically asking what could conceivably go wrong.

A closer examination finds that even some of the bulls think market gains will come with volatility triggered by valuation concerns and central banking questions. Take Federated Hermes chief equity strategist Phil Orlando, who is expecting the S & P 500 to post back-to-back 12 % gains in the next two years, rising to 7,800 in 2026 and 8,600 in 2027.

Financial markets historically like to“ test” new Fed chairs, Orlando notes, and as of this May, President Trump’ s handpicked central banker will be setting monetary policy. After a brief honeymoon, Orlando thinks the markets could suffer a downdraft, as often happens in the second and third quarters, and that may“ shake out” some of the bulls.

2025 was a stellar year for both stocks and bonds, and in normal times the anticipation of a dovish Fed would draw cheers from the bond market. But with artificial intelligence disrupting many industries and geopolitics showing more signs of instability in the year ahead, these times are anything but normal.

For frustrated financial advisors who preached global diversification during years while foreign markets consistently trailed domestic equities, last year finally provided validation for their counsel. The MSCI Developed Markets Index( ex- U. S.) was up 31.9 % while MSCI’ s emerging markets counterpart was up 33.6 %, as both benchmarks benefited from a weak U. S. dollar and more attractive valuations. But it was also a strange year, as gold was

14 | FINANCIAL ADVISOR MAGAZINE | JANUARY / FEBRUARY 2026 WWW. FA-MAG. COM