Tom Lee says there are more reasons to be optimistic about financial markets in 2026 than not.
In a new interview on CNBC, the head of research at Fundstrat predicts a potentially choppy phase early in the year before a strong finish with green markets.
“Compressed into one year it will be joy, depression and a rally. I think like last year in 2025 we had a terrible start, people got very down, then we had a nice rally to end the year. April was the bottom… So I think the market will test the new Fed. That’s probably why we have some fear this year.
But there are many things to be optimistic about. Rates are ‘birthday’, the Fed is cutting and the ISM (Institute of Supply Management) could finally be back above 50 and that is good news. We are quite optimistic about some groups that have fallen behind, such as energy one of our top sector picks this year.
In addition to the Magnificent 7, Lee also mentions other sectors that could receive an excessive bid this year.
The Mag 7 should still continue to generate good earnings growth, and then the financials and small caps. So there are a lot of things that could go well in the market.
I think earnings will do even better… Other sectors are rerating, but the Mag 7 could well follow earnings growth. So that will pull the overalls [price to earnings] down.”
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