The Federal Reserve has already started cutting its rates in 2025, and it’s likely that will continue, to the average American’s benefit — at least for now. Typically, falling interest rates lead to greater borrowing power, which is good for businesses. This often leads to good news for stock market investors, as stocks tend to rise at the outset.
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With so many economic factors converging as we head into 2026, investors with low risk-tolerance may be seeking stability. Here’s how experts say 2026 is likely to shake out at present, and which economic sectors are likely to provide safety with enough growth to hedge against inflation.
Among other factors, tariffs, concerns over increased inflation in light of interest rate drops and the government shutdown add multiple levels of volatility to the stock market.
The volatility index (VIX) hit 22.44 on Friday, October 10, 2025, closing at 21.66. It’s been hovering roughly between 15 and 17 points since June, in a prolonged period of activity and intensity. However, this may not be cause for concern.
“The VIX is not necessarily a fear gauge,” said Yahoo Finance markets and data editor Jared Blikre in a video. “It’s a measure of institutional hedging activity. So they big guys are a little bit scared, but they’re not too scared.”
The takeaway: timing the market is still a bad idea, and the pros aren’t pulling out. Neither should you.
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Mark Kravietz, founder and managing partner of ALINE Wealth, points to health care as a market poised for further growth. “It’s a sector that has underperformed the market this year and the valuations of the companies are very fair,” he said. “We still have an aging population and ongoing health needs that make this sector recession-resistant.”
A recent article on SeekingAlpha.com noted that AI-powered healthcare platforms are poised to do exceptionally well, with the market predicted to reach $504 billion by 2032.
Companies like Zepp Health Corporation, OptimizeRX Corporation and Veeva Systems were rated as “strong buys,” according to SeekingAlpha.
While the consumer discretionary and luxury goods sectors may suffer, the retail sector in general could show stability.
Apparel and retail stocks showed returns of 27.3% and 25.8%, respectively, in prior falling interest rate environments, noted Robert R. Johnson, PhD, CFA, CAIA, professor of finance at Heider College of Business, Creighton University.
