Market To See Midterm-Led 'Initial Volatility' In 2026? Analyst Says Don't 'Chase' Tech, Focus On These Sectors - Avista (NYSE:AVA), Dominion Energy (NYSE:D)
Benzinga·2025-12-22 13:10

Core Viewpoint - The stock market may experience a "meltup" similar to 2025, but there is uncertainty regarding the continuation of double-digit gains in the new year [1] Market Predictions - The market has performed strongly over the past three years, but a predicted pullback of 10 to 12% is expected in 2026 due to midterm elections causing initial market volatility [2] - Post-midterm elections, investor focus is anticipated to shift towards economic growth, GDP, and potential tax cuts from President Trump's proposed legislation [2] Federal Reserve Chair Selection - The selection of the Federal Reserve Chair will significantly impact the market, particularly if Trump chooses a candidate outside of the "Two Kevins" [3] - Christopher Waller is also being considered for the Fed chair position, which could influence market dynamics [3] Sector Allocation Recommendations - A well-diversified portfolio is emphasized, with a cautious approach suggested for the tech sector in the first half of the year [3] - Other sectors such as industrials, healthcare, and basic materials are recommended for allocation, with a particular focus on utilities due to energy demand related to AI and data centers [4] Market Outlook and Analyst Predictions - Citigroup forecasts a year-end target of 7,700 for the S&P 500, driven by strong corporate earnings and AI investments [4] - Ed Yardeni suggests the 2020s could mirror the Roaring 1920s, with the S&P 500 potentially reaching 10,000 by the end of the decade, although some analysts express concerns about the impact of AI on profit margins [5] Utilities Sector Insights - Analysts highlight Dominion Energy Inc, Eversource Energy, and Avista Corp as high-dividend yielding stocks within the utilities sector [6] Year-to-Date Performance - The SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF have seen year-to-date increases of 16.41% and 20.94%, respectively [7]