LIVE MARKETS-Next year, stocks outlook bright even with “Wall of Skepticism”

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NEXT YEAR, STOCKS OUTLOOK BRIGHT EVEN WITH “WALL OF SKEPTICISM”

The U.S. stock market is likely to provide a solid return next year, bolstered by Federal a Reserve “put” even as it faces a “wall of skepticism,” according to Thomas Lee, head of research at Fundstrat Global Advisors.

The firm expects the S&P 500 .SPX to return 10% next year, ending at 7,700, saying that three back-to-back years of strong returns doesn’t exclude another strong year.

The “New Fed” will provide dovish policy, which will be positive for stocks in the second half of the year. U.S. President Donald Trump is expected to appoint a more dovish chair to replace Jerome Powell when his term ends in May.

Major drivers of earnings and gross domestic product will be artificial intelligence and energy infrastructure, Wall Street moving onto the blockchain and onshoring. With that, Lee favors technology - including AI and cryptocurrencies bitcoin and ethereum - basic materials, energy and financials.

Meanwhile, “the significant “Wall of Worry” will be a tailwind for bull market,” Lee said. This includes concerns over three years of 20% gains, AI valuations, a politically divided nation, new Fed Chair, social unrest and whether the Supreme Court overturns tariffs.

(Karen Brettell)

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