Bank of America's Top 10 Predictions for 2026

The overall strategy is to go long on emerging markets + go long on commodities.

Then SPX is expected to reach 7100. There was a time when SPX6900 was just a funny meme. It's really great to be a long-term investor in US stocks.

1️⃣ US GDP beats expectations: Growth forecast at 2.4%, above market consensus. Driven by fiscal support, tax cuts, and the lagged effects of rate cuts.
2️⃣ No AI bubble: The investment cycle continues to expand. Data center and chip capex will translate into real productivity gains.
3️⃣ Emerging markets benefit: Weaker dollar, falling rates, and lower oil prices will drive capital back to emerging markets.
4️⃣ China outlook upgraded: Stimulus takes effect + positive trade signals, with further upside potential for economic forecasts.
5️⃣ S&P 500 “Earnings without valuation gains”: EPS expected to surge 14%, but index gain seen at only 4%-5% (target 7100 points).
6️⃣ US Treasury yields to fall: 10-year Treasuries will drop to 4%-4.25%. Rate cuts expected by the end of '25 and mid-'26.
7️⃣ US housing market stabilizes: Home prices basically flat, transaction volumes rebound. If rates fall, home prices face upside risk.
8️⃣ Volatility intensifies: As the economic impact of AI becomes clearer and policy factors come into play, asset price swings will increase.
9️⃣ Private credit cools off: Expected returns to be cut in half from 9% to 5.4%, with capital possibly shifting to high-yield bonds.
🔟 Copper bull run continues: Ongoing supply shortages, combined with global demand recovery, will keep copper prices strong.