Bank of America predicts the market rally will continue into 2026, with the S&P 500 expected to rise 8% and earnings to grow 12%. Strategists cite a 1990s-style productivity boom and investment cycle as key drivers. The bank’s top predictions include a 7,200 target for the benchmark index.

Despite concerns about the US economy, Bank of America remains optimistic about stocks in 2026. The S&P 500 is up 13% year-to-date, rebounding from earlier dips. Strategists anticipate a strong year ahead, driven by increased business investment and productivity growth.

BofA strategists are bullish on the market’s outlook, projecting an 8% rise in the S&P 500 over the next year. The bank’s price target aligns with other forecasts from Wall Street firms like Morgan Stanley and Goldman Sachs. Earnings growth is also expected to be robust, with a 12% increase anticipated.

Bank of America’s strategists highlight factors contributing to potential “boom-time earnings,” including improved productivity, investment, looser monetary policy, and trade uncertainty easing. They predict a broader pool of winners in the market, with gains spreading to sectors beyond tech, such as energy and machinery.

The AI-driven rally in the stock market is broadening, showing signs of expansion beyond mega-cap tech stocks. Small-caps are gaining momentum, with the Russell 2000 index climbing 37% since hitting post-Liberation Day lows. Strategists anticipate a broader investment pickup and capex boom in the coming year.

Read more at Yahoo Finance: Here are BofA’s 3 big predictions for the stock market in the next year