Johnson: I think the market is looking for more stimulus

Market Outlook - The market is anticipating more stimulus, and a hawkish cut could lead to disappointment if no further cuts are indicated for early 2024 [1][2] - The overall popular averages, including the Dow and S&P, may not see significant gains, particularly in mega-cap stocks [2][3] Stock Performance - A hawkish message from the Fed could result in mid and small-cap stocks performing better, while MAG7 stocks are expected to lag [4] - The S&P 500 price target for 2026 is set at 7150, reflecting a 4% increase from current levels, despite historical trends suggesting lower returns after three consecutive years of gains [5][6] Volatility and Market Trends - Historical data indicates that after three years of strong returns, the fourth year typically experiences consolidation or pullbacks [6][7] - 2026 is projected to be a year of higher volatility, with potential strength in the first half and a significant drawdown expected in Q3 due to midterm elections [8][10] Catalysts for Market Movements - A potential 20% drawdown could occur around Q2 or Q3, driven by midterm elections and possible shifts in congressional control [9][10] - Following the elections, additional Fed cuts may serve as a catalyst for market recovery, although the path forward will differ from previous years [11]