LIVE MARKETS-Truist sees high single to low double-digit gains in 2026

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TRUIST SEES HIGH SINGLE TO LOW DOUBLE-DIGIT GAINS IN 2026

An economic expansion began in 2020, and a bull market has endured since the fall of 2022. As Keith Lerner, chief market strategist at Truist, sees it, history suggests both still have room to run.

According to Lerner, global economic growth is projected at 3.1% in 2026, slightly below 2025 and 2024, with the U.S., Europe, and emerging markets in Asia responsible for most of the expansion.

Domestically, Truist expects an uptick in real GDP growth to 2.3% in 2026 from 1.8% in 2025. While Lerner says this pace falls short of the robust post-pandemic rebound, it signals a favorable backdrop underpinned by four key forces: fiscal stimulus, marginally lower rates, steadier trade and tariff policies, and ongoing investment in AI and technology enhancements.

"The S&P 500 bull market, which began in October 2022 – just a month before ChatGPT launched – has now surpassed its third anniversary. History suggests there is potential for high single-digit to low double-digit returns in 2026," writes Lerner in Truist's "2026 Economic & Market Outlook" note.

Lerner says that of the seven prior bull markets that reached their third year, all posted gains in the fourth year, averaging 15%. Additionally, he argues that historically, the S&P 500 has performed well in the wake of Fed rate cuts near all-time highs, as occurred in late October, provided that a recession is avoided (Truist's base case).

In fact, he says that in similar instances, stocks were higher 93% of the time one year later, with an average advance of 13%. One caveat is that midterm election years tend to deliver positive, but more muted returns, with sharper intra-year drawdowns.

"The average return during such years is about 8%, the weakest of the four-year presidential cycle, with an average maximum drawdown of 17%," Lerner writes.

(Terence Gabriel)

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