LPL Research Presents: Outlook 2026 The Policy Engine

In 2025, we observed a market environment where fiscal and monetary policy decisions, rather than traditional business fundamentals, were the primary drivers of market direction. This shift means that policy influence and market momentum have become significantly more impactful in shaping market trends, often overshadowing underlying economic performance.

This policy and momentum-driven market is expected to continue, bringing with it continued volatility and significant price fluctuations. Investors should prepare for these swings by remaining patient and avoiding impulsive reactions to short-term sentiment.

The good news is that LPL Research believes policy could be a tailwind for markets. We believe monetary decision-makers will continue easing policy as economic conditions downshift and inflation remains contained. Corporate earnings may help, though there will be little room for error. Core bonds will quietly