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華爾街日報Market To See Midterm-Led 'Initial Volatility' In 2026? Analyst Says Don't 'Chase' Tech, Focus On These Sectors
Kenny Polcari, the chief market strategist at SlateStone Wealth, discussed the possibility of a “meltup” in the stock market in the new year, similar to the one experienced in 2025. However, he expressed uncertainty about the continuation of double-digit gains in the new year.
Post-Midterm Focus Shifts to Growth
In an interview with Maria Bartiromo of Fox News on Monday, Polcari acknowledged the strong performance of the market in the past three years but predicted a more 10 to 12% “pull back” in the market in 2026. He attributed this to the upcoming midterm elections, which he believes will cause “initial market volatility.”
When asked about the main events impacting the stock markets in 2026, Polcari said that after the midterm elections, investors would be more interested in economic growth, GDP, and potential tax cuts from President Donald Trump‘s Big, Beautiful, Bill Act.
He added that selection of Fed Chair would only move market if Trump selects a candidate other than the “Two Kevins,” meaning Kevin Hassett and Kevin Warsh. Notably, it was reported last week that Trump would interview Federal Reserve Governor Christopher Waller also for the position of Fed chair.
The analyst also emphasized the importance of a well-diversified portfolio and suggested a cautious approach towards “tech sector” in the first half of the year. “I don’t want to chase tech,” stated Polcari.
In terms of allocation, he also suggested looking at other sectors like industrials, healthcare, and basic materials. Polcari, particularly pointed at the utilities sector amid the energy demand around AI and data centers. “I still think utilities are going to end up having another good year next year,” he said.
Citi, Yardeni Diverge on AI-Driven S&P Outlook
The stock market’s future has been a topic of intense speculation, with various analysts offering their predictions. Citigroup recently forecasted a year-end target of 7,700 for the S&P 500, citing strong corporate earnings and ongoing AI investment. The firm also highlighted the increasing importance of companies that adopt AI technology.
Meanwhile, economist and market strategist Ed Yardeni has suggested that the 2020s could be a modern-day echo of the Roaring 1920s, with the S&P 500 potentially reaching 10,000 by the end of the decade.
However, not all analysts share this optimism. Some have expressed concerns about the AI-fueled transformation of big tech, warning that surging capital expenditures could erode profit margins and reduce once-high-growth giants into low-return entities.
Speaking of utilities stocks, Wall Street analysts point to Dominion Energy Inc (NYSE:D), Eversource Energy (NYSE:ES) and Avista Corp (NYSE:AVA) as high-dividend yielding stocks.
Price Action
On a year-to-date basis, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, climbed 16.41% and 20.94%, respectively, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.