A Democrat takeover of the House (but not the Senate) in 2026 midterm elections, improved economic growth, sticky inflation and stocks not reaching double-digit growth are among Crosmark’s Global Investments CEO/CIO/PM Bob Doll’s 10 Predictions for 2026.
Doll released his popular list of annual predictions for the coming year on Dec. 31, listing this year’s theme as “High-Risk Bull Market.”
Doll said the U.S. is set to remain the world’s growth engine, driven by a resilient economy and an AI-driven super cycle that is fueling record capex, rapid earnings expansion, and unprecedented market concentration.
“A combination of the One Big Beautiful Bill’s impact on both consumer and capital spending, America hosting the World Cup, and the country’s 250th anniversary will all create a tailwind for 2026 economic growth and earnings.”
Bob Doll
“The growth outlook is good, which bodes well for corporate profits and should be supportive of risk-asset markets. The recently passed U.S. tax bill (One Big Beautiful Bill) should provide a boost, especially to capex,” Doll said in his concluding remarks. “Deregulation should also support activity. A combination of the One Big Beautiful Bill’s impact on both consumer and capital spending, America hosting the World Cup, and the country’s 250th anniversary will all create a tailwind for 2026 economic growth and earnings. Add to that a Fed that seems almost certain to focus more on the full employment part of its mandate rather than inflation, and it is difficult to get bearish. However, the downside of good growth may be upward pressure on inflation.”
Doll prefaced his 2026 predictions with a quick review of 2025, noting that financial markets experienced strong gains in an “everything rally” including stocks, bonds, and commodities led by AI enthusiasm, relatively behaved inflation, strong corporate earnings, and anticipation and realization of central bank interest rate cuts.
He said investors remain confident that inflation will stay tame and the Fed will reduce interest rates substantially in the year ahead. Capital markets appear priced for permanent perfections, but he added that such conditions cannot last indefinitely.
“It is with this backdrop that we proceed, as usual, with fear and trepidation (and hopefully some good, educated guesses) to unveil our prognostications for 2026 in the form of 10 Predictions,” Doll writes.
10 Predictions for 2026
1. Economic growth in the U.S. improves from approximately 2.0% to approximately 2.5% real GDP.
2. Inflation remains sticky and fails to make much if any progress toward the Fed’s 2% target.
3. The 10-year Treasury yield trades primarily between high 3%s and mid 4%s as credit spreads widen (i.e., a “coupon-ish” year).
4. Earnings growth falls short of consensus +14% and P/Es decline modestly, making it a tougher year to make money.
5. Stocks fail to advance by a double-digit percentage for only the third time in 10 years.
6. Technology, communication services, and financials outperform materials, utilities, and consumer discretionary.
7. International stocks outperform the U.S. for the second year in a row (first time in 20 years).
8. AI continues to be volatile/erratic creating another year of elevated volatility.
9. Faith-based share of industry AUM increases for the 10th year in a row.
10. Republicans retain control of the Senate but surrender the House, losing at least 20-25 seats.
In his concluding remarks, Doll writes that the unemployment rate is likely to remain at low levels; inflation will remain sticky due to service sector pressures; and business investment will continue to be buoyed by AI-driven and other capital spending.
“2026 promises to be anything but dull. Rapid AI investment and adoption will likely continue to dominate market sentiment and given the pace of technological advancement, it is hard to imagine this won’t ultimately deliver meaningful productivity gains,” Doll writes. “That said, the winners and losers will depend on the complex interplay of evolving forces, many of which may not become apparent until after 2026. In the meantime, markets could continue to swing sharply between boom-and-bust narratives.”
Check out Doll’s complete commentary at this link.
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