{"id":236380,"date":"2025-12-22T10:45:00","date_gmt":"2025-12-22T15:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=236380"},"modified":"2025-12-23T04:11:58","modified_gmt":"2025-12-23T09:11:58","slug":"december-22-2025-810-am3-min-read","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/december-22-2025-810-am3-min-read\/","title":{"rendered":"Market To See Midterm-Led &#8216;Initial Volatility&#8217; In 2026? Analyst Says Don&#8217;t &#8216;Chase&#8217; Tech, Focus On These Sectors"},"content":{"rendered":"\n<p><strong>Kenny Polcari<\/strong>, the chief market strategist at&nbsp;<strong>SlateStone Wealth<\/strong>,&nbsp;discussed the possibility of a \u201cmeltup\u201d in the stock market in the new year, similar to the one experienced in 2025. However, he&nbsp;<a href=\"https:\/\/www.benzinga.com\/markets\/equities\/25\/11\/48588301\/us-stocks-face-two-short-term-threats-amid-feds-cautious-approach-warn-analysts\" target=\"_blank\" rel=\"noreferrer noopener\">expressed uncertainty<\/a>&nbsp;about the continuation of double-digit gains in the new year.<\/p>\n\n\n\n<p>In an interview with&nbsp;<strong>Maria Bartiromo<\/strong>&nbsp;of Fox News on Monday, Polcari acknowledged the strong performance of the market in the past three years but predicted a more 10 to 12% \u201cpull back\u201d in the market in 2026. He attributed this to the upcoming&nbsp;<a href=\"https:\/\/www.benzinga.com\/news\/politics\/25\/12\/49385834\/trump-skeptical-if-his-economic-policies-would-sway-voters-in-2026-midterms-i-cant-tell\" target=\"_blank\" rel=\"noreferrer noopener\">midterm elections<\/a>, which he believes will cause \u201cinitial market volatility.\u201d<\/p>\n\n\n\n<p>When asked about the main events impacting the stock markets in 2026, Polcari said that after the midterm elections, investors would be more interested in economic growth, GDP, and potential tax cuts from President&nbsp;<strong>Donald Trump<\/strong>\u2018s&nbsp;<a href=\"https:\/\/www.benzinga.com\/markets\/tech\/25\/07\/46270052\/as-trumps-big-beautiful-bill-is-signed-into-law-these-evs-from-tesla-gm-and-ford-will-become-more-expensive\" target=\"_blank\" rel=\"noreferrer noopener\">Big, Beautiful, Bill Act.<\/a><\/p>\n\n\n\n<p>He added that selection of Fed Chair would only move market if Trump selects a candidate other than the \u201cTwo Kevins,\u201d meaning Kevin Hassett and Kevin Warsh. Notably, it was reported last week that Trump&nbsp;<a href=\"https:\/\/www.benzinga.com\/news\/politics\/25\/12\/49441043\/trump-to-interview-christopher-waller-this-week-in-fed-chair-search-report\" target=\"_blank\" rel=\"noreferrer noopener\">would interview<\/a>&nbsp;Federal Reserve&nbsp;Governor&nbsp;<strong>Christopher Waller<\/strong>&nbsp;also&nbsp;for the position of Fed chair.<\/p>\n\n\n\n<p>The analyst also emphasized the importance of a well-diversified portfolio and suggested a cautious approach towards \u201ctech sector\u201d in the first half of the year. \u201cI don\u2019t want to chase tech,\u201d stated Polcari.<\/p>\n\n\n\n<p>In terms of allocation, he also suggested looking at other sectors like industrials, healthcare, and basic materials. Polcari, particularly pointed at the utilities sector amid the energy demand around AI and data centers. \u201cI still think utilities are going to end up having another good year next year,\u201d he said.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-citi-yardeni-diverge-on-ai-driven-s-amp-p-outlook\">Citi, Yardeni Diverge on AI-Driven S&amp;P Outlook<\/h2>\n\n\n\n<p>The stock market\u2019s future has been a topic of intense speculation, with various analysts offering their predictions.&nbsp;<a href=\"https:\/\/www.benzinga.com\/analyst-stock-ratings\/analyst-color\/25\/12\/49418212\/sp-500s-ai-fuel-tank-still-full-with-7700-target-from-citi\" target=\"_blank\" rel=\"noreferrer noopener\">Citigroup recently forecasted<\/a>&nbsp;a year-end target of 7,700 for the S&amp;P 500, citing strong corporate earnings and ongoing AI investment. The firm also highlighted the increasing importance of companies that adopt AI technology.<\/p>\n\n\n\n<p>Meanwhile, economist and market strategist&nbsp;<a href=\"https:\/\/www.benzinga.com\/markets\/equities\/25\/12\/49492778\/sp-500-at-10000-by-2030-yardeni-still-bets-big-on-the-roaring-2020s\" target=\"_blank\" rel=\"noreferrer noopener\">Ed Yardeni has suggested<\/a>&nbsp;that the 2020s could be a modern-day echo of the Roaring 1920s, with the S&amp;P 500 potentially reaching 10,000 by the end of the decade.<\/p>\n\n\n\n<p>However, not all analysts share this optimism.&nbsp;<a href=\"https:\/\/www.benzinga.com\/news\/25\/11\/48898088\/magnificent-seven-stocks-ai-capex-outlook-bubble-risks-artificial-intelligence-nvidia\" target=\"_blank\" rel=\"noreferrer noopener\">Some have expressed concerns<\/a>&nbsp;about the AI-fueled transformation of big tech, warning that surging capital expenditures could erode profit margins and reduce once-high-growth giants into low-return entities.<\/p>\n\n\n\n<p>Speaking of utilities stocks, Wall Street\u00a0<a href=\"https:\/\/www.benzinga.com\/trading-ideas\/dividends\/25\/12\/49532744\/wall-streets-most-accurate-analysts-give-their-take-on-3-utilities-stocks-delivering-high-dividend-yields-9\" target=\"_blank\" rel=\"noreferrer noopener\">analysts point to<\/a>\u00a0<strong>Dominion Energy Inc\u00a0<a href=\"https:\/\/www.benzinga.com\/quote\/D\" target=\"_blank\" rel=\"noreferrer noopener\">(NYSE:D<\/a>)<\/strong>,\u00a0<strong>Eversource Energy\u00a0<a href=\"https:\/\/www.benzinga.com\/quote\/ES\" target=\"_blank\" rel=\"noreferrer noopener\">(NYSE:ES<\/a>)<\/strong>\u00a0and\u00a0<strong>Avista Corp\u00a0<a href=\"https:\/\/www.benzinga.com\/quote\/AVA\" target=\"_blank\" rel=\"noreferrer noopener\">(NYSE:AVA<\/a>)<\/strong>\u00a0as high-dividend yielding stocks.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted December 22, 2025 &#8211; <a href=\"https:\/\/www.benzinga.com\/analyst-stock-ratings\/analyst-color\/25\/12\/49534387\/market-to-see-midterm-led-initial-volatility-in-2026-analyst-says-dont-chase-tech-focus-on-these-sectors\">Market To See Midterm-Led &#8216;Initial Volatility&#8217; In 2026? Analyst Says Don&#8217;t &#8216;Chase&#8217; Tech, Focus On These Sectors<\/a><\/p>\n\n\n\n<p><strong><em>Disclaimer<\/em>:<\/strong><em>&nbsp;This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.<\/em><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kenny Polcari, the chief market strategist at SlateStone Wealth, discussed the possibility of a \u201cmeltup\u201d in the stock market in the new year, similar to the one experienced in 2025. However, he expressed uncertainty about the continuation of double-digit gains in the new year.<\/p>\n","protected":false},"author":1611,"featured_media":236410,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[18,6,8,9,26,3],"tags":[],"contributors-categories":[13584],"class_list":{"0":"post-236380","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-macro","8":"category-north-america","9":"category-region","10":"category-securities","11":"category-text-articles","12":"category-traders-insight","13":"contributors-categories-benzinga"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Market To See Midterm-Led &#8216;Initial Volatility&#8217; In 2026? 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