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Wells Fargo CIO for Wealth and Investment Management, Darrell Cronk, is predicting stocks will climb much higher in 2026, even as they are hitting new highs this year.
In a new interview on CNBC Television, Cronk says that Fed rate cuts and other factors will likely extend the stock market’s bullishness into next year.
“We think 2026 probably sets up to be an even better year for all the reasons that you now have. The fiscal plane landed, if you will, with the ‘One Big, Beautiful’ law, no longer a bill. So fiscal is kind of solved. If monetary policy continues down this path. Corporate balance sheets are in an incredibly strong position.
Just look at the post-Fed [meeting]… High-yield spreads are at fresh lows [Thursday morning]. There’s only been a couple of times in history where the Fed has cut interest rates and yet banks are at their all-time high…
And even [Thursday] morning, equal-weighted tech actually finally set a new all-time high, coming off of when it tried to do it in the summer of 2024. The markets are telling you, Hey, things are a go for the remainder of this year and into next year for more of this bull.”
However, Cronk says he is long-term bearish on the small-cap stock sector.
“It doesn’t surprise us that you see near-term outperformance of smalls, but when you actually get into the Russell 2000, it’s a $3 trillion market cap index against a $67 trillion US stock market cap. Even if you compare that to tech, which is now $28 trillion, this whole idea that you’re going to rotate from tech to small cap… is a little bit nonsensical. And what’s more important is the quality degradation that’s happened in the small-cap universe. Private capital has come in there and cherry-picked a lot of the good companies and taken them back private…
We just went to an unfavorable or underweight small caps here about a month or so ago, and we think that’s still the right trade to hold.”
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