“The market continues to [hit] record highs on the back of strong earnings and easing U.S.–China trade tensions,” said Mark Hackett, chief market strategist at Nationwide, who calls the current state of “steady growth without irrational exuberance” a ”Goldilocks environment.”

As the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have climbed to never-before-seen levels, stock valuations are attempting to follow suit. Wall Street appears set to enter the new year with the second priciest stock market on record -- and history offers investors a dire warning of what's to come.

The S&P 500 edged down by 0.1% in early trading but remains within 1% of its all-time high set in late October. The Dow Jones Industrial Average was up 32 points, or 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.

Sosnick told MarketWatch that the wild swings in the stock market this week underscore how fragile investor confidence has become, with Friday’s rally also appearing fleeting as the market’s underlying fundamentals have barely changed. That could spell trouble for the days ahead.

Live Updates Get The Best American Airlines Group Live Earnings Coverage Like This Every Quarter Get earnings reminders, our top analysis on American Airlines Group, market updates, and brand-new stock recommendations delivered directly to your inbox.

The U.S. stock market rose to the edge of its all-time high. The S&P 500 added 0.2% Friday and finished just shy of its record closing level, which was set in October.

In 2024, the median Wall Street forecast undershot where the S&P 500 actually finished the year by 18%. Firms are pacing to be much more accurate this year, but they're still 3% below the consensus target with a month to go. Morgan Stanley, JPMorgan, and Goldman Sachs — which all had the same target — are currently 5% behind.

Wall Street always loves a good consensus, especially when the stock market’s rip-roaring. That’s exactly when Bank of America’s fresh 2026 forecast becomes all the more interesting. According to a Business Insider report,

The U.S. stock market rose to the edge of its all-time high. The S&P 500 added 0.2% Friday and finished just shy of its record closing level, which was set in October.

It's not quite as bad as a bubble, but an "air pocket" in stocks can still hurt.