CIBC Capital Markets believes that the S&P 500 (SPX) will reach 7,450 by the end of 2026, although Head of Equity and Portfolio Strategy Chris Harvey warned that the benchmark index may run into volatility before reaching that target.
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“Risk, at this point in time, is just too expensive. You’re not getting paid for it. So, we think there needs to be a repricing of risk,” said Harvey.
Rotation Favors Profitable Stocks ahead of 2026
Investors have rotated from risky stocks with little or no earnings to more profitable stocks in recent weeks, and Harvey believes that this theme could continue into the new year. He recommends analyzing companies across the board instead of just focusing on megacap stocks, although he highlighted Microsoft (MSFT) as a good risk-reward opportunity.
Harvey added that investors are overlooking several macroeconomic catalysts, such as the transition of the Fed Chair in May 2026 and a review of the United States-Mexico-Canada Agreement (USMCA) in July 2026.
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