Bank of America says the market is only at the start of a holiday run, noting that multiple tailwinds are converging to spur a rally that could extend deep into 2026.
In a new CNBC interview, Chris Hyzy, chief investment officer at Bank of America Private Bank, describes the current rally as the opening phase of a seasonal climb that has room to run to the upside.
He says the setup looks more like a pre-Santa Claus surge than a late-stage melt-up.
“Well, right now, the momentum… this is an elf rally right now on the way to a Santa Claus type of rally. So we are just beginning this right now.”
Hyzy says the underlying drivers emerge early next year as refunds, fiscal relief and corporate incentives work their way into the system.
“They’re in the workshop right now. And ultimately, delivery happens later. Why is that the case? Obviously, tailwinds are coming in the first quarter of next year, really between February and April. You might see some good tax refunds, fiscal bill relief on the consumer side.
Consumers are already resilient. Boomers are spending. They’re the biggest growth area, masking over some weakness in some other areas.”
Hyzy says corporate investment remains a core driver, with AI-related spending still moving forward.
“But then you get the actual corporate tax relief as well. Tax is probably not the right word, but just in terms of fiscal bill relief, you get a couple of tailwinds. CapEx is still moving forward.”
He adds that the coming interest rate cuts introduce a rare alignment: easier monetary policy at a moment when growth is holding.
“But the critical point is, when have we seen the Federal Reserve cut rates into a growing momentum economy. It’s been a long time. We know why. But at the end of the day, the third mandate, which is price stability, arguably speaking, asset price stability, is alive and well.”
Hyzy describes 2026 as a solid bull year, driven more by earnings gains than by expanding valuations.
“And that gives us a very good comfort level for 2026 being a proud bull… It’s not going to go up 20%. We’ve seen that in 2023, 2024. We’re on track for that in 2025. A proud bull is more: let’s track earnings growth. Let’s not expect multiple expansion.”
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