Schwab Center for Financial Research Releases 2026 Mid-Year Market Outlook

The Schwab Center for Financial Research (SCFR) has published its 2026 mid-year outlook, offering investors a broad view of U.S. equities, the economy, taxable fixed income and global markets for the second half of the year.

The report, titled Schwab Market Perspective: Mid-Year Outlook, describes what the firm calls a "split verdict" for investors. On one side, the earnings backdrop is the strongest in years, business investment remains solid and the labor market has stayed resilient. On the other, earnings growth is highly concentrated, household equity exposure is at record levels and consumer sentiment is historically weak outside the stock market. The bond market, meanwhile, has become increasingly competitive with equities on a risk-adjusted basis.

"Considering the interplay between economic trends and stock market behavior, the second half of 2026 is presenting investors with a bit of a split verdict," said Liz Ann Sonders, chief investment strategist at Schwab Center for Financial Research, and Kevin Gordon, head of macro research and strategy, in a joint statement. They noted that the index-level signal from the stock market obscures a more complicated picture.

Fixed Income and Global Outlook

In fixed income, SCFR recommends a selective approach. Collin Martin, head of fixed income research and strategy, said investors should favor short- and intermediate-term maturities, maintaining a below-benchmark average duration. "Despite the recent rise in Treasury yields, we suggest investors favor a below-benchmark average duration with their bond holdings," Martin said. "In our view, now is not the time to favor long-duration investments just yet."

The global equity outlook remains broadly positive, according to Chris Ferrarone, head of equity research and strategy, and Michelle Gibley, director of international equity research and strategy. Economic activity has improved, earnings growth remains strong, capital investment is robust and financial conditions are relatively benign. However, those strengths are concentrated and sit within a shifting structural environment that could generate ongoing geopolitical pressures and higher inflation risks over the longer term.

For U.S. stocks specifically, SCFR expects continued support from strong business investment, while consumer spending could face persistent headwinds if the war persists and keeps upward pressure on inflation. The report also notes that investors in the bond market remain selective, favoring shorter maturities over long-duration exposure.

The outlook highlights potential risks including higher inflation, geopolitical turmoil and heavy market concentration, even as global economic expansion and corporate earnings growth underpin a positive tone for equities.

Charles Schwab describes SCFR as a division of Charles Schwab & Co., Inc., focused on providing research, market insights and practical guidance for investors.