The big things you need to know: First, after updating our models for end of year, we are reiterating our 7,750 12-month S&P 500 price target, noting that the signal from our sentiment model deteriorated since our last update in early December while the signal from our GDP model strengthened. Second, a few things that jumped out in our other updates included the recent divergence in the size and style trades, the S&P 500’s inability to recapture last summer’s peak on the rate of upward EPS estimate revisions, and the latest results of the Duke CFO survey where optimism picked up on one’s own company and the broader economy, accompanied by an optimistic view on the productivity benefits coming from AI.

The big things you need to know:

1. First, we are upgrading S&P 500 Health Care to overweight from market weight.
2. Second, we are upgrading S&P 500 Communication Services to overweight from market weight.
3. Third, our other S&P 500 recommendations are unchanged. We remain overweight Financials and Materials, underweight Consumer Discretionary, and market weight all other sectors. Among our market weights, we have a preference for sectors that look attractively valued on our quant analysis (Consumer Staples, Energy, REITs) over those that look expensive (Utilities, Tech, and Industrials) which have been the early beneficiaries of the AI trade.
4. We also close with a quick thought on the biggest macro takeaways from our 4Q25 global analyst outlook survey.

The big things you need to know:

• First, several things that US equity markets have been linked to (breadth, bitcoin, private market fears, Fed cut expectations, consumer sentiment) have gotten better in recent updates.
• Second, a few signals from our year-ahead outlook analysis have shifted over the past week.
• Third, there have been a few interesting twists and turns in positioning since Thanksgiving week in terms of sectors and factors.