Markets will have a good year but still lots of angst in markets, says RBC's Lori Calvasina

Market Outlook - The market has experienced a volatile year but is expected to perform well in 2026, with a 12-month price target for the S&P at 7,750, reflecting a 14% gain from the previous target [3][4] - Despite a recent 5% drawdown, there is optimism for continued growth, with potential for a conservative estimate of 7,200 and an optimistic estimate of 8,000 based on GDP forecasts and earnings valuations [4] Earnings Growth - Earnings growth is projected at 13%, which indicates limited potential for multiple expansion, suggesting that stock performance will largely depend on the earnings environment [6] - There are signs of upward revisions in earnings, although not as strong as in previous months, indicating a mixed outlook for earnings growth [6] AI and Sector Performance - There is significant interest in how AI can enhance productivity across various sectors, particularly in healthcare, despite some investor anxiety regarding AI investments [7][8] - Companies in the consumer space have begun reporting tangible productivity improvements from AI, such as a 30% increase in productivity from AI-enhanced fulfillment centers [8] Investor Sentiment - Investors are currently in a risk management mode, seeking opportunities in undervalued sectors while remaining cautious about the broader market dynamics [7][15] - The investment community is learning that the transformative potential of AI may take longer to materialize than initially expected, leading to a need for patience [16] Economic Indicators - The consensus GDP forecast for the end of next year is at 2%, with potential risks if it drops to the 0-1% range, which historically correlates with stock declines [17]