Stock market should steadily broaden out in 2026, says Piper Sandler’s Kantrowitz

[Digital numbers, chart and financial figures on the screen.]
Torsten Asmus

The market is approaching an important cyclical turning point with potential for broadening rather than booming, according to Michael Kantrowitz, chief investment strategist at Piper Sandler.

This broadening represents a “breadth magnitude story” affecting both macro and micro perspectives in the economy, he said during an interview with CNBC.

Kantrowitz noted that despite three strong years in the market, housing data and manufacturing PMIs have remained stagnant for about two and a half years.

“We see now we have the beginnings of an improvement in the macroeconomy, which should translate into a broader participation of earnings to the upside in the market as well,” he said.

Kantrowitz attributed this improvement primarily to interest rate stability, noting that rates “have been stable for two and a half years” and are now starting to drift down following the Fed’s 25 basis point cut.

He also emphasized that this market broadening doesn’t necessarily mean a rotation away from technology stocks (XLK [https://seekingalpha.com/symbol/XLK]), (IYW [https://seekingalpha.com/symbol/IYW]), which have dominated for a decade.

“I think the door is getting a little open,” he said. “The bouncers [are] letting some more people in into the party, perhaps.”

The current economic environment resembles what Kantrowitz describes as a “Goldilocks” scenario in a post-inflation shock world. “As long as it’s balanced, which I would argue it has been, it hasn’t been a negative surprise. It hasn’t been a swift move up in the unemployment rate,” he noted about the labor market conditions.

This balance has created a rare situation where “the unemployment rate and the stock market (SP500 [https://seekingalpha.com/symbol/SP500]), (COMP:IND [https://seekingalpha.com/symbol/COMP:IND]), (DJI [https://seekingalpha.com/symbol/DJI]) went up together” over the past two and a half years, he said.

Despite potential challenges like tariff threats and government shutdowns, Kantrowitz believes investors have become increasingly resilient. “We’ve climbed the largest wall of worry in history, probably in the last five years,” he said.

He suggests that market participants have adopted a “show me first, and then I’ll react” approach to uncertainty, indicating a more measured response to potential economic disruptions.

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