The US stock market is heading for another big growth spurt.
That may seem hard to believe given how high stocks have climbed in the last three years, but the market is flashing a handful of signs it’s headed for a new growth cycle characterized by a period of strong growth for asset prices and the economy, according to Andrew Sheets, the global head of fixed income research at Morgan Stanley.
“It’s off to an eventful start, certainly, but we think that core message remains in place,” Sheets said of the market outlook on a recent episode of the bank’s “Thoughts on the Market” podcast. “For now, we think they remain supporting evidence of our core view that this market cycle can still burn hotter before it burns out,” he added.
Morgan Stanley produced one of the most bullish 2026 stock forecasts on Wall Street, with strategists predicting the S&P 500 to climb 13%. The bank pinned its thesis to strong earnings growth and a continued “rolling recovery” in the economy, referring to its previous view that the US was in a “rolling recession,” or a downturn that appeared in different sectors at various times.
Sheets pointed to three signs that earnings and economic growth were on track to be stronger than investors were currently expecting. Here’s what the bank is looking at:
1. Copper prices are booming
Copper has soared in recent months. It’s a possible sign that the economic backdrop is looking favorable for the next year, Sheets suggested.
The metal was up around 44% over the course of 2025, marking its best year since the Great Financial Crisis.
Copper has long been viewed as an economic bellwether, since demand for the metal is closely tied to industrial and manufacturing activity. Prices have risen in recent months, largely due to the imbalance of supply and demand, as well as the metal’s expected use in data centers.
2. Korean stocks are rallying
As much as US stocks went up in 2025, Korean stocks beat the rest of the market, another positive signal for global economic growth, Sheets said. The Korea Composite Stock Price Index soared 75% last year, outpacing the rest of the world and beating the S&P 500’s 17% gain.
Stocks in Korea tend to be “highly cyclical” and are viewed as a “proxy for global economic optimism, Sheets said. He also noted that small-cap stocks in the nation, which tend to be economically sensitive, have been outperforming large-cap stocks.
3. Financial stocks are thriving
Financial stocks in the US and Europe have also been on a roll. That’s another economically sensitive area of the market that can pave the way for higher growth, Sheets suggested.
The financial sector in the US was one of the best-performing areas of the market last year, with financial stocks in the S&P 500 gaining 14% in the last 1-year period, according to data from State Street Investment Management.
“These are different assets in different regions that all appear to be saying the same thing — that the outlook for global cyclical activity has been getting better and has now actually been doing so for some time,” Sheets said.
“Now, any individual indicator can be wrong. But when multiple indicators all point in the same direction, that’s pretty worthy of attention,” he added.
Wall Street almost unanimously expects another strong year for stocks, thanks to expected catalysts like rate cuts, robust corporate earnings, and solid US economic growth. Morgan Stanley, RBC, and Deutsche Bank are among the big banks that think the S&P 500 will gain at least 10% in the coming year. beating its historic average.