Your login is via your account |
|
|
📈 Three Sectors Expected to Rally in 2026 In 2023, the S&P 500 delivered a 24% return, followed by a 23% return in 2024. As 2025 comes to a close, investors are on track to snap up another 16%. But after three strong years… will the music keep playing?
Investors have reason to be cautious. Consider that the back-to-back S&P 500 gains of more than 20% in 2023 and 2024 haven’t happened since the late 1990s. Investors, however, can broaden their allocations beyond the S&P 500. Three sectors in particular, look good heading into next year. We go into that in today's article. |
|
| Quote of the week
“Those who have knowledge don't predict. Those who predict don't have knowledge.” Lao Tzu |
|
|
What Happened In The Markets This Week? Here’s a quick summary of what’s been going on: 📱 TikTok’s future in the US is still unresolved (BBC) TikTok still faces a January 2026 deadline to be sold or banned in the US, with no approved transaction in place. Potential buyers are ready, but approval from ByteDance and Chinese authorities remains uncertain. US policymakers continue to frame the issue around national security and data sovereignty. Any deal would likely require separating TikTok from its core recommendation algorithm – a major operational risk. For investors, TikTok is less a tech story and more a geopolitical one. Expect volatility in sentiment around US social media names as deadlines approach. 🎬 Warner Bros rejects Paramount and sticks with Netflix (CNN) -
Warner Bros. Discovery has rejected Paramount’s hostile takeover bid and confirmed it will move ahead with its deal with Netflix. -
The board said Netflix’s offer provides more certainty, despite Paramount’s higher headline valuation. -
Warner Bros raised concerns about Paramount’s complex financing and heavier regulatory risk. -
Netflix pitched its deal as cleaner, faster and easier to close, even as critics warn about industry concentration. -
For investors, this shows that deal certainty now matters more than headline price in mega M&A. Regulatory approval is now the biggest remaining hurdle. To see our take on these market stories below, simply check out the full article! Now let’s dive into the main piece. |
Sector #1: Financials – High Estimated Earnings and a Relatively Low PE Analysts have a positive outlook for the financial sector in 2026. But before we look at their estimates, let’s look at what the market expects. ✨ What the Market Expects from the Financial Sector
To gauge market expectations, we need to examine the difference between the sector's price return and the change in its price-to-forward-earnings multiple. This approach helps reveal the potential for upside value.
For example, if a sector is up 6% for the year and its price/forward earnings multiple has increased by 2%, then it’s safe to assume that the market has revised its estimate of the sector’s earnings power higher by 4%.
Using this analysis, the financial sector stands out as the industry with the most significant multiple contraction (-3%) among all sectors in the S&P 500 this year, while generating a YTD return of about 11%. These numbers suggest that the industry will have strong earnings in the near term. |
Additionally, recent FactSet data support an optimistic outlook for the financial sector. In their early December Earnings Insight, they explain that: “The Financials sector has recorded the second-largest percentage increase in estimated (dollar-level) earnings of all eleven sectors since the start of the [fourth] quarter.”
They continue, “as a result, the estimated (year-over-year) earnings growth rate for this sector has increased to 6.2% today from 4.1% on September 30.” 🔎 What Analysts Expect from the Financial Sector for 2026 Analysts, like the market, are optimistic.
➡️ J.P. Morgan:
J.P. Morgan forecasts that the financial sector will benefit from AI, which will “broaden out from the innovators (tech) to the enablers…and the adopters (financials, health care).” In the same report, the analysts explain that “financials boast resilient earnings and differentiated catalysts like deregulation and yield curve steepening.” |
Markets have rallied hard for three straight years... but will it continue? Analysts predict a few sectors set to outperform next year. Our full article covers: 3️⃣ The three sectors poised for growth in 2026 📈 How the market is currently pricing them 📝 What analysts think of these sectors
and what opportunities and risks await them 🪙 What these all mean for investors and how to think about sector positioning heading into 2026 |
|
|
💬 Join the discussion by leaving a comment!
What sectors do you believe will shine in 2026? |
|
|
Key Events During the Next Week Monday Tuesday |
This article is our last Market Insights edition for the year. Thanks for being with us this 2025, and we hope to see you again next year! Until then, invest well. Simply Wall St |
|
|
| | This email is from Simply Wall Street Pty Ltd
Level 5, 3 20 Pitt St Sydney 20 00, NSW, Australia. | | Simply Wall St has no position in the company(s) mentioned. Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this email/website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us. | | | Don’t want to receive Market Insights? Unsubscribe
Want to stop receiving emails or check which emails you are subscribed on? Manage email preferences | | |
|
|
|
|
