Why Fundstrat's Lee expects the S&P to hit 7,700 by end of 2026

Market Outlook - The S&P 500 is projected to reach 7,700 by the end of 2026, indicating a decent year ahead despite a deceleration from the previous three years of 20% gains [1][2] - The market is expected to experience turbulence similar to the current year, influenced by factors such as tariffs and a hawkish Federal Reserve [2] Federal Reserve Dynamics - A new Federal Reserve chairman is anticipated to be confirmed, which will lead to a testing period for the markets from January to October [5] - The expectation is for a dovish Fed, which could provide a "Fed put" that acts as a tailwind for stocks [4][5] Economic Indicators - The current economic environment suggests a bullish outlook for stocks, as the Fed is weighing downside risks to the economy [7] - The end of quantitative tightening (QT) and the absence of tightening measures are contributing to a favorable market scenario, akin to quantitative easing (QE) [7][8] Sector Performance - Small-cap stocks are hitting record highs, and financials are rallying, indicating positive sector performance [8]