Overview
- Sam Stovall projects roughly 13.5% growth in S&P 500 profits in 2026, supporting a constructive outlook for stocks.
- His year-end S&P 500 target of 7,400 implies about a 7% gain from early January levels, pointing to a likely pause in the string of double-digit annual returns.
- The recommended tactic is to own equal amounts of the prior year’s best three sectors or the top 10 sub-industries rather than rotating into laggards.
- Based on 2025 performance, the favored sectors for continued leadership are Communication Services, Information Technology, and Industrials.
- He warns that midterm years have historically delivered only about 3.8% average gains with roughly 18% average intra-year drawdowns, and he urges readiness to trim winners and raise cash if a rollover emerges, noting post-election periods have tended to rebound strongly.