Wharton's Jeremy Siegel Flags Three Near-Term Bumps For 2026 But Maintains Positive Outlook: Report

The economist flagged the likelihood of another government shutdown, the Supreme Court’s tariff decision, and the new Fed Chair announcement as potential headwinds.

• Siegel also predicted that the stock market’s gains in 2026 will be much more muted. 
• The economist predicted that the S&P 500 index will likely gain between 5% and 10% next year.
• He attributed the potential slowdown to waning momentum in the Magnificent Seven stocks.

Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School of Business, on Monday reportedly flagged three potential hurdles for U.S. markets in 2026 but noted that it would still be a positive year if they were navigated successfully.

During an interview with CNBC, Siegel predicted another potential government shutdown in January. He also noted that the Supreme Court is likely to announce its decision on tariffs, potentially in the same month. Finally, he anticipated an announcement from President Donald Trump about the next Fed chairman, also likely in January.

“We need to get through some bumps, as I say. But if we can get through those successfully, it still looks like a positive year for me,” Siegel said during the interview.

Market Outlook In 2026

In addition to these headwinds, Siegel said that he believes the stock market’s gains next year will be much more muted than in 2025.

He added that the S&P 500 index, which is heavily weighted towards the “Magnificent Seven” and technology stocks, will likely gain only between 5% to 10%. For reference, the benchmark index has climbed over 17% this year.

“We know it’s been predicted for a long time because the streak of the Mag Seven is really quite unprecedented,” he said in the interview. The non-Mag Seven growth could be between 10% and 15%, he added.

Funding, Tariffs And Fed Chair

In November, President Trump signed a spending bill that ended the longest shutdown in U.S. history. The shutdown disrupted many government services and delayed key economic releases. However, the bill was a current resolution or a temporary agreement, meaning another government shutdown risk looms in January if Congress fails to reach a longer-term agreement.

On the tariffs front, the U.S. Supreme Court is currently reviewing arguments about the Trump administration’s trade tariffs. The decision is likely to have a direct impact on America’s relationships with its trading partners as well as the president’s economic agenda.

As discussions around the next Fed Chair continue, Trump recently said on Truth Social that anyone who disagrees with his views on interest rates “will never be the Fed Chairman.”

Meanwhile, U.S. equities edged lower in Monday morning’s trade. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.47% at the time of writing, while the Invesco QQQ Trust ETF (QQQ) traded 0.64% lower. The SPDR Dow Jones Industrial Average ETF Trust (DIA) also declined 0.54%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF), on the other hand, was up 0.1% at the time of writing.

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