T. Rowe Price insists investors will find 2026 less stressful

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Maybe you have a big 401(k) account or an Individual Retirement Account.

You would be within your rights if you found this week's market volatility  — coming just seven months after April's Trump Tariff minicrash  — just a bit unsettling.

Is the world about to fall apart?

No, say experts at T. Rowe Price, the big investment management company.

the investing world may look a bit skittish right now, a point T. Rowe Price acknowledges.

The major stock averages fell abruptly last week; the Standard Poor's 500 Index fell nearly 2% last week, even after a 1% gain on Friday. The Nasdaq 100 Index dropped 3.1%.

Bitcoin slumped 10.3% last week and is off 23% in November. It's down 9.6% for the year and down 18.5% since Donald Trump's inauguration on Jan. 20.

(If you want to some cheerful news, look no further than Eli Lilly, which ended the week up 3.4% at $1,059.70. Perhaps as important, it also became the first drug company to achieve a market cap of $1 trillion or more. Lilly is up 37% on the year. )

But T. Rowe, as many call the firm, believes the nervous numbers many investors see now will evolve into a better market in 2026. The company is among the 20 largest money managers with nearly $1.8 trillion in assets under management. About two-thirds of the total is in retirement accounts.

Related: Stock market jitters surge as crypto market cracks

Better times ahead

How much better is, of course , a matter of opinion, but the firm remains convinced 2026 will be a less volatile year. The benign environment would be fueled by:

• Business and personal tax cuts

• Big tax refunds in the first half of the year,

• More capital spending and job growth

• Reduced tariff uncertainty.

But wait a minute, you say: The news is filled with reports of thousands of layoffs. Don't the job losses eat into this rosy scenario?

Yes, said Tim Murray, a capital markets strategist, during a T. Rowe Price press briefing this past week. "Labor market weakness and sticky inflation cloud the outlook."

But they don't cloud the outlook to the point that the two issues derail the firm's outlook. These are issues that keep weighing on all markets.

The good news, if you can call it that, is that Donald Trump's tariffs, which set off the April market slump, have so far proved less harmful to the economy than expected, and that's bullish for stocks.

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Partly this is due to the massive corporate spending on all things having to do with artificial intelligence. That's driving a substantial amount of growth in the economy, offsetting the weakness of the housing market and manufacturing.

The jobs data that T. Rowe Price sees are creating a bifurcated economy. Noncyclical sectors  — government, education and health care  — are stagnant at best or just plain struggling.

The cyclical portions of the economy, manufacturing, mining and, especially, technology are picking up the slack.

The conundrum of housing

The exception to this optimistic outlook is housing, which continues to struggle and weigh on the economy. The problem with housing starts with the mysterious relationship of, first, three numbers:

• Buyers' incomes

• Mortgage rates

• Prices

Incomes are not rising as fast as home prices. Mortgage rates have been coming down this year and probably will in 2026, but not enough to unleash huge amounts of new demand. And many homeowners who refinanced before and after the pandemic can't afford to move.

There's a fourth issue weighing on housing, and it extends to more than just "Do we buy that house?"

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We'll let Home Depot CEO Ted Decker describe it, as he did on the company's Aug. 19 earnings call:

"When we talk generally though to our customers, each of our sets of consumers and pros, the number one reason for deferring the large project is general economic uncertainty."

"Uncertainty" came up several times during that August presentation. The company repeated it at its third-quarter earnings call on Nov. 18 along with a problem posed by good news: Southern states were not battered by hurricanes this year, and Home Depot didn't see the usual spending to get homes cleaned up and repaired.

Is the market in a bubble?

The question came up multiple times during the briefing, prompted in part by the collapse of two companies this fall: Tricolor Holdings, a subprime auto lender, and auto parts manufacturer First Brands.

Tricolor made loans to undocumented workers and others. In some cases, loans were made to buyers who didn't have drivers licenses. It forced several banks to charge off loans to the company. JPMorgan Chase took a $170 million charge from its dealings with Tricolor.

First Brands, lawsuits allege, was looted by its founder, Patrick James, with billions of dollars missing.

So far, the situation seems to be contained, said Glenn August, CEO and founder of Oak Hill Advisors, now a T. Rowe Price subsidiary. (August is also a member of the parent company's board.) He did not believe the two collapses are a sign of worse things to come and said the company has its portfolios of loans and investments under control.

But bond investor Jeffrey Gundlach, CEO of DoubleLine Capital, thinks private credit might turn into something else because the sector has grown quite rapidly since the 2008-2009 recession.

At worst, there are problem stocks, problem bonds and, even issues in the world of private credit. The trick is to manage private credit portfolio carefully and thoughtfully, said August, who founded Oak Hill in 1991.

Let us hope August is right.

Related: Goldman Sachs President drops blunt take on stocks

This story was originally reported by TheStreet on Nov 23, 2025, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.