Morgan Stanley Predicts Three Surprises For The Stock Market In 2026
- 24.12.2025, 20:37
These events could shake up the global stock market.
Analysts at investment bank Morgan Stanley have highlighted three unexpected events that could shake up the global equity market in 2026. Its research cites Business Insider.
Experts generally expect next year to be a good one for the stock market, but there are always surprises and risks that could change the outlook.
"A year without surprises would itself be a surprise," the analysts wrote.
The study said the S&P 500 Index will rise another 13% in 2026, thanks to strong corporate earnings and a "gradual recovery" in the U.S. economy.
1. Productivity boom without employment growth
The U.S. economy could experience a "productivity boom without employment growth," which would put pressure on inflation and open the door for further Fed rate cuts.
In this scenario, a weakening U.S. labor market would help contain wage growth and inflation, while an acceleration in productivity would help keep economic growth stable, Morgan Stanley analysts wrote. They estimate that core inflation could fall below 2% in such a scenario.
"This supply-driven disinflation gives the Fed the ability to cut rates to a level favorable to the economy without investor concerns about accelerating inflation caused by [monetary] policy," Morgan Stanley said.
2. The correlation between stocks and bonds is changing again
Stock prices typically change inversely to bond prices as declines in risky assets cause investors to seek safety in bonds. That dynamic has changed in 2025, when stock and bond prices have risen steadily throughout the year.
According to Morgan Stanley, that's partly because stocks have recently found themselves in a situation where bad news is good news - weak economic data has been positive for stocks because it has made investors optimistic about Fed rate cuts.
Analytics say that dynamic could change again if inflation returns to the Fed's target next year. U.S. Treasuries are seen as a safe haven and a hedge against inflation.
3. Rising commodity and energy prices
Commodities, including energy, have shown significant growth in 2025 and this trend could repeat in 2026. According to strategists, this is due to a number of events that could lead to an "explosive" rise in commodity prices:
The Fed continues to cut interest rates while other central banks raise them. This makes the U.S. dollar less attractive compared to other currencies around the world, lowering its value;
The cheap dollar and stimulus measures are helping the economy of China, one of the world's largest producers and consumers of rare earth and precious metals, recover. China is also one of the world's largest energy consumers.
"A weaker dollar and high consumption in China are pushing energy prices, including gasoline, which is currently below a five-year low, to new highs," the bank notes.
Analysts generally expect 2026 to be a favorable year for energy and other commodity prices, thanks to factors such as tight supply, rising demand due to artificial intelligence and increased interest in safe haven assets