US Stocks: These 3 Catalysts Should Reignite Momentum in 2026

U.S. equities have lagged their typical December pattern, but UBS expects three forces to “reignite equity market momentum into early 2026,” even as investors question the absence of a traditional year-end rally.

The S&P 500 and Nasdaq are down slightly this month, and UBS noted that “some hesitance is not necessarily surprising,” given gains of about 16% so far this year. 

Still, December has historically been one of the strongest months for equities, and UBS highlighted that much of the seasonal strength typically arrives in the second half of the month.

The first major catalyst is earnings. UBS stated that corporate profits “have continued to surpass expectations this year,” with technology leading upgrades to forward estimates. 

The bank expects “S&P 500 earnings per share will grow around 10% year over year in 2026,” helping drive the index to 7,700 by the end of next year.

Second, UBS pointed to upcoming leadership changes at the Federal Reserve and the likelihood of further easing. 

Leading candidates for Fed chair have struck a dovish tone, and the bank expects another rate cut in the first quarter. “Historically, Fed easing outside recessions has provided a strong tailwind for equities,” UBS said.

Finally, a pending Supreme Court ruling on President Trump’s tariff powers could offer short-term clarity for global manufacturers. 

UBS expects IEEPA tariffs to be repealed, noting the decision “may trigger swings in sentiment rather than a lasting rally,” underscoring the need for diversification and gold as a geopolitical hedge.

“Regardless of whether a December rally materializes, we believe investors should position for further advances in equity markets,” the bank wrote.

UBS reiterated its “Attractive” rating on U.S. equities, citing opportunities in technology, health care, utilities and financials.