Piper Sandler analyst drops bold take on S&P 500

01 Jan 2026, 15:47 · The Fresno Bee

Contrary to what the lion's share of market pundits think, Piper Sandler's Craig Johnson doesn't see a big year ahead for theS&P 500.

In fact, his outlook is calling for only modest upside (5% to 7,150), with a choppy path ahead, testing investor patience along the way.

Having covered stock markets for more than half a decade, I've seen a ton of market pundits making bold calls.

Only a handful tend to be disciplined, and even fewer tend to stick with their views when the tape turns ugly.

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That's exactly why I pay a lot of attention when Craig Johnson weighs in. For perspective, Johnson is a veteran stock market analyst and currently the managing director and chief market technician at Piper Sandler.

A former president of the CMT Association, Johnson is also a frequent guest on CNBC, with his research often cited in the financial press.

Perhaps one of his most prescient calls came in early 2020, when he maintained an eyebrow-raising year-end target of 3,600 for the S&P 500.

It came at a point when the pandemic crushed stocks.

However, the index later bottomed out near the 2,237 mark and concluded the year at 3,756, Barron's reported, making his call directionally correct and pretty close.

Johnson's now back with a unique take on the S&P 500's next move, saying it's likely to look more like a "jump, slump, and pump" than a smooth run, even with AI pushing stocks.

Investor Howard Marks also recently issued a warning.

Stocks face a choppy outlook heading into 2026 as election risks and rate expectations collide globally.

Photo by Michael M. Santiago on Getty Images

The market can still go up, just not the way investors want

Johnson expects the S&P 500 to continue grinding higher over the full year, but not quite in the way most investors hope.

Johnson elaborated on this idea in a recent CNBC interview.

Johnson feels early momentum will likely give way to a weaker middle stretch on the back of political noise and investor fatigue.

Moreover, Johnson's call cuts through those who feel the AI-driven enthusiasm will effectively smooth out volatility. Though he feels returns will come, patience will be tested along the way.

Why midterm election years often feel extra volatile for U.S. stocks

Midterm election years typically have had a long reputation for rattling stock markets.

History shows us that turbulence is tied to investor reactions to shifting political power, policy uncertainty, and the aftermath of the vote.

Policy uncertainty peaks into November. As control shifts in Washington, markets reprice taxes, regulations, and sector-related risks. According to Reuters' 2022 reporting, investors usually expect gridlock. RBC data cited by Reuters showed an average S&P 500 return of 14% with a split Congress, in comparison to nearly 10% under unified Democratic control (since 1932).
The pre-midterm run-up is typically weak. Thinner gains usually leave stocks a lot more sensitive to the Fed, inflation, and recessionary pressures. A U.S. Bank study (from 2022) finds the S&P 500 averages 0.3% in the 12 months before midterms, significantly behind the 8.1% long-term average.
Big drawdowns are common even in "okay" years. Volatility usually shows up intra-year, with a 2008 article from Stock Trader's Almanac calculating an average 16.9% peak-to-trough drop across the last 17 midterm years.
Relief rallies often follow the vote. In the same 2022 article from Reuters, it was cited that the S&P 500 has jumped in all 18 post-midterm 12-month periods since 1950.

Past 5 U.S. midterm election years (S&P 500 full-year returns)

The year-end S&P 500 results tell the story.

Here's how the S&P 500 wrapped up the previous five midterm election years:

2022: -18.11%
2018: -4.38%
2014: +13.69%
2010: +15.06%
2006: +15.79%

Source: Slickcharts

Big banks lay out competing S&P 500 targets for 2026

Morgan Stanley: Sees the S&P 500 hitting 7,800 by the close of 2026, spearheaded by healthier earnings and AI-powered efficiency gains (a conducive Fed backdrop to boot), according to Reuters.
JPMorgan: Targeting 7,500 by the end of 2026, backed by an AI-led growth cycle and assuming two Fed cuts, Reuters reports.
Citi: Sets a 7,700 year-end 2026 target, according to Reuters; forecasting AI to remain a critical driver while forecasting a 2026 EPS of $320, flagging higher volatility.
Bank of America: Among the more cautious calls at around 7,100 for end-2026, implying just mid-single-digit gains, Investopedia reports.
Barclays: Bumped its end-2026 target to 7,400 (from 7,000) on megacap strength, according to Reuters.

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This story was originally published January 1, 2026 at 7:47 AM.