Yintou Securities predicts a downturn in the US stock market! A second term for the president + a new Federal Reserve chairman = a "dangerous year" for the market. The S&P 500 will fall to 6,500 points by the end of next year.

Steve Sosnick, Chief Strategist at Interactive Brokers, has set a year-end target of 6500 points for the S&P 500 Index, which implies a drop of about 3% from current levels. This forecast is much more cautious compared to the bullish forecasts of other Wall Street firms. The strategist explained his bearish investment view and cited historical trends to justify the prudence of his strategy. Historical data plays a significant role in Sosnick's analysis, especially the impact of presidential term cycles. He noted, "There have only been two bear market years in history, both occurring in the second year of a presidential term." He used the "Volmageddon" event in February 2018 as an example to illustrate market volatility during such cycles. Sosnick also expressed concerns about new Federal Reserve chairs facing challenges early in their terms. He cited historical cases like Alan Greenspan (faced the 1987 stock market crash shortly after taking office) and Ben Bernanke (dealt with the financial crisis early in his term), stating that "new Fed chairs usually face market tests in their first years in office." Regarding the current artificial intelligence boom, Sosnick doubts its sustainability. He warned that if the leading industries driving recent gains experience a pullback, it would be difficult to offset losses solely through sector rotation, stating that "these companies have propelled the market rapidly upwards, but if they experience any setback, even just stagnation, it will require a huge amount of fund rotation to counteract the impact." Recent market performance of Broadcom seemed to confirm Sosnick's concerns. Despite strong earnings reports, the stock price still saw a significant decline (around 5%), indicating that individual stocks are still subject to downward pressure in the current market environment, even with strong fundamentals. Sosnick also highlighted the unique nature of pre-market trading, referring to early morning futures surges at 4 a.m. as "Pluto bounces," due to their lack of sustainability during regular trading hours. He speculated that during holiday periods when institutional selling pressure was absent, this pattern might change or lead to different market dynamics. It is worth mentioning that Interactive Brokers is one of the few Wall Street firms bearish on the 2026 U.S. stock market. Previously, several Wall Street firms had released forecasts for the S&P 500 Index in 2026. While target points may differ, the general consensus is that, with the continued AI investment wave, a shift towards loose monetary policy, and profit growth spreading, U.S. stocks are expected to continue their upward trend.