There is a base case of positive returns for 2026, says Edward Jones' Mona Mahajan

Market Overview - The recent CPI data came in well below expectations, particularly the core CPI reading, which is significant as two-thirds of the basket consists of core services [1][2] - Historical data indicates a 73% chance of a Santa Claus rally occurring in the last five trading days of the year and the first two trading days of the following year [2] Economic Outlook - The market has been moving sideways, but there is potential for a year-end push, with confidence in economic and earnings growth heading into 2026 [3] - Earnings growth is expected to be in double digits for the upcoming year, driven by earnings growth and valuation expansion [3] Sector Analysis - There is limited scope for valuation expansion in the tech and growth sectors, but opportunities exist in other market segments outside the major tech companies [4] - Preferred sectors for investment include healthcare, industrials, and consumer discretionary, with a positive outlook for these areas heading into 2026 [4] Consumer Behavior - The current environment of lowering interest rates by the Fed is favorable for consumers, particularly impacting mortgage rates and benefiting high middle and high-income consumers [6] - The high middle and high-income consumer segment is crucial for driving overall economic activity [6]