Earnings season has delivered stronger-than-expected results, lifting investor confidence and driving markets toward new highs. With nearly half of S&P 500 companies having reported, analysts are watching whether the rally can extend through year-end.
BNN Bloomberg spoke with Jimmy Lee, CEO of Wealth Consulting Group, who said resilient margins, lower labour costs and deregulation are creating a supportive backdrop for stocks. He expects continued gains in cyclical sectors and small caps, and sees a path for the S&P 500 to reach 7,000 by year-end.
Key Takeaways
- Earnings beats have exceeded expectations, supporting optimism for a year-end market rally.
- The S&P 500 could climb toward 7,000, helped by a “Santa Claus rally” and solid fundamentals.
- Margins remain strong as revenue growth outpaces cooling labour costs.
- Investors are rotating into cyclical sectors, including consumer discretionary, financials and industrials.
- A housing recovery and cash on the sidelines could boost market sentiment heading into 2026.
Read the full transcript below:
ANDREW: We’re well into earnings season for S&P 500 companies. Let’s check out some of the themes that have emerged. We’re joined by Jimmy Lee, CEO of Wealth Consulting Group. Jimmy, great to see you. What has jumped out for you so far from these corporate results, if you could put your finger on one or two things?
JIMMY: Good morning, Andrew. So far, we’ve had great results. More companies have beaten earnings expectations than analysts were anticipating. We’re going through a big week with mega-cap tech results — a bit mixed, but overall, I think it’s a net positive. The story right now in the United States is margins. Sales are higher, payroll costs have been contained, and companies are keeping healthy margins. That’s supporting strong earnings, and I expect we could see double-digit earnings growth in Q3. Earnings are backing up the new highs we’ve seen in the stock market, and I think we’ve got a path to 7,000 on the S&P 500 with a Santa Claus rally — or maybe even before that.
ANDREW: Isn’t it interesting that earnings are holding up so well, given the fears that were hanging over the market in April surrounding President Trump’s trade war?
JIMMY: Absolutely. The TSX is up more than 20 per cent without a trade deal. I think a lot of investors are looking past the tariffs. They’ve come to the conclusion that tariffs will end up somewhere between 10 and 20 per cent for most U.S. trading partners, and that’s already priced in. Investors are now looking forward to tailwinds such as lower interest rates. I think we’ll get a rate cut in December, even though Jerome Powell put a bit of a damper on that in his last speech. But I think we’ll get one. In a lower-rate environment, with deregulation playing out in different sectors, I think deal flow will pick up across the economy — which bodes well overall.
ANDREW: Are there areas of the market that you’re wary of right now, Jimmy?
JIMMY: People have been talking about potential bubbles in certain areas. The good news is we’ve seen a broadening of the market. Since the lows in April, small-cap stocks have actually outperformed large caps, which is great. We’ve also seen international equities perform well this year. Bonds are attracting a lot of cash, with investors expecting the Fed to continue cutting rates. So, there are plenty of opportunities — more value now than in the crowded mega-cap tech trade of the past five years. If we do get a run to 7,000, we’ll probably see some volatility, just from how quickly the market has risen. But overall, I think there are more signs for bullishness.
ANDREW: You’ve talked about the decent outlook for corporate profits and the U.S. economy holding up fairly strongly despite some weakness in labour. So economically sensitive stocks such as consumer discretionary and financials are a decent bet?
JIMMY: Yes. We’ve been in the non-recession camp all year. We like cyclicals — sectors such as consumer discretionary, financials and industrials. The big surprise for 2026 could be a shift in sentiment. We like negative sentiment as a contrarian indicator, but I think it could turn more positive. With the housing market unlocking and mortgage rates coming down, we’ll see more home sales. That could change investor psychology. For many people, home equity is their biggest asset, and when that market opens up, it could drive broader economic growth and keep the consumer at the forefront.
ANDREW: What about bonds? Do you think investors should be holding U.S. government debt right now?
JIMMY: Yes, we invest in bonds and do a lot of research there. I think there’s opportunity in high-grade bonds. They deserve an allocation in investor portfolios right now. We’re in a bit of a Goldilocks environment where many asset classes are up, which is a nice problem to have. Earlier this year, investors were overly concentrated in a few names, but we’re now seeing more diversification — including into bonds. There’s been some concern about private credit, and that’s been on my mind. Any time the economy grows quickly, some loans get made without proper due diligence. That said, I think both the overall bond market and private credit market will be fine.
ANDREW: Finally, let’s look at a five-year chart for the S&P 500. You’ve said November and December are traditionally good months for the market, and you think there’s a good shot at hitting 7,000 by year-end?
JIMMY: Yes. Our firm put out an outlook earlier this year suggesting the S&P 500 could get close to or pass 7,000. We stuck with that thesis even during the volatility in April because we believed tariffs would be temporary — like COVID was. Fortunately, we were right. We’ve been long the sectors we thought would perform well, and they’ve delivered. I think the stock market will continue to climb. Key macro tailwinds — lower rates and deregulation — should play out over the next year. For sentiment to improve further, the housing market unlocking will be a big catalyst. Also, many institutional investors haven’t participated in this rally. There’s still record cash sitting in money markets, and I think a lot of that will flow back into equities and fixed income.
ANDREW: Jimmy, thank you very much for joining us.
JIMMY: Great to see you, Andrew.
ANDREW: Jimmy Lee, CEO of Wealth Consulting Group.
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This BNN Bloomberg summary and transcript of the Oct. 31, 2025 interview with Jimmy Lee are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
