Volatility at the start of 2026 has shaken near-term sentiment, but Evercore ISI contends the bigger trend for the S&P 500 remains upward. In a note to clients, the firm's strategist emphasized that recent pullbacks should be seen as potential entry points rather than evidence that the rally has failed.
Evercore ISI raised its S&P 500 2026 earnings-per-share (EPS) estimate to $304 from $296. The firm cited a run of stronger-than-expected results and what it describes as a "solid economy" underpinning further earnings gains. Fourth-quarter 2025 results, in particular, reinforced this stance: S&P 500 EPS rose about 13 percent year over year, a performance Evercore said exceeded consensus by roughly six percentage points and considerably outpaced the pre-pandemic average.
Analyst commentary accompanying the forecast stressed that current market hedging and geopolitical anxieties may have delayed upside, but have not derailed it. Evercore ISI singled out the 6,520 mark on the S&P 500 as a technical support level likely to hold during any downward move, framing a retracement to that zone as an opportunity to add positions.
The firm recommended that investors use episodes of weakness to add exposure, particularly to companies tied to AI disruption. Evercore ISI noted a contrast between a market that is already hedged against dislocation and a positive earnings trajectory, suggesting that the combination points to a postponement of gains rather than a permanent setback.
Sector-wise, Evercore ISI expects technology, materials and industrials to show the strongest EPS growth in 2026. The firm also referenced geopolitical developments as a source of short-term risk but maintained that few systemic threats are present that would fundamentally derail the market's path.
In closing, Evercore ISI reiterated its view that a pullback toward S&P 500 support at 6,520 will probably hold and that investors should view such weakness as an opportunity to add exposure to names discounted by recent AI-related selling and geopolitically driven price pressure.