Stocks are in a late-stage bubble and poised to crash 21% next year, while Treasury yields above 5% will signal a new era of tight money, analysts say

Capital Economics analysts forecast the S&P 500 will reach 8,250 by end of 2026, then plunge 21% to 6,500 by end of 2027. Multiple indicators point to a late-stage bubble: valuations near the dotcom peak, expected earnings growth at comparable levels, and free cash flow expected to turn negative for leading AI hyperscalers in 2027. Ruchir Sharma, chairman of Rockefeller International, warns the AI bubble could pop when the 10-year yield definitively breaches 5%. The 10-year yield hit 4.97% on Friday.

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