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Investing.com -- Truist’s Keith Lerner says the U.S. bull market remains firmly intact as the cycle enters what he calls the “seventh inning stretch,” arguing that neither the economic expansion nor the equity rally is near the end.
Lerner writes that “the evidence suggests we are neither early in the cycle nor at the end,” noting that the expansion began in 2020 while the bull market has been running since late 2022.
History, he adds, shows that “of the seven prior bull markets that extended beyond three years, all posted gains in year four.”
Truist expects the U.S. economy to accelerate next year. According to Lerner, “we expect an uptick in the pace of the U.S. economy to 2.3%, supported by relief from tax changes, Fed rate cuts towards 3%, greater stability on tariffs, and ongoing AI- and tech-driven capital spending.”
These forces, he says, “should help extend the cycle.”
Corporate earnings are said to remain the backbone of the rally. Lerner argues that despite shifting market narratives, “corporate earnings have proven remarkably resilient,” with Truist forecasting low double-digit earnings growth in 2026.
Furthermore, strong post-rate-cut performance and historical patterns point to “high single- to low double-digit market returns,” he writes.
Lerner continues to favor technology and AI, calling them “dominant themes driving this bull market.”
While concentration risk is real, “the leaders of a bull market tend to endure to the end of the cycle,” even with periodic rotations. Truist also expects broader participation and sees opportunities in small caps.
The economic backdrop is mixed but constructive. Wage growth is expected to outpace inflation, and Lerner points to a temporary tailwind: “Americans should see an aggregate $158 billion boost in tax refunds” early next year.
Lerner concludes that “the weight of the evidence indicates the market’s upward trajectory should continue,” even if investors should expect “curveballs” along the way.