Falling Oil Could Trigger a 10% Stock Market Rally, Says Wall Street Strategist

Will the stock and crypto markets end 2026 with notable gains? The definitive answer likely depends on oil prices. It’s the biggest obstacle. The US 10-year Treasury yield ended Friday at 5.17%, its highest level since 2007, after the Federal Reserve raised rates this month. This is usually bearish for the stock and crypto markets, as investors see Treasury bonds as the safer asset. 

Yet Turtle Creek strategist David Spika believes the S&P 500 could still climb another 5% to 10% before year-end. His case starts with crude.

Will Oil Prices Go Down By December?

WTI oil closed Friday near $92, down sharply from levels above $100 earlier this month. Spika argues that if oil keeps falling, inflation pressure should ease with it. 

That could drag long-term borrowing costs lower and give expensive stocks more room to run.

There are reasons for the retreat. 

• Saudi Arabia has restarted its East-West pipeline, giving its crude another route around the Strait of Hormuz. 
• Donald Trump also said US officials held a three-hour meeting with Iran’s delegation at the UN this week.

For markets, cheaper oil would arrive at a useful moment. On September 16, the Fed raised its benchmark rate by 25 basis points to 3.75%-4%, saying inflation remains elevated.

Spika thinks the 10-year Treasury yield could fall toward 4.75%-4.78% if oil prices continue to fall. That would ease one of the biggest pressures on equity valuations.

“I think stocks have in the 5 or 10% upside before year end,” Spika said, while warning earnings growth should slow next year.

His preferred names include Microsoft, whose Azure revenue grew 43% in its latest quarter, and Berkshire Hathaway, which held about $365.5 billion in cash and short-term Treasurys at the end of June.

The catch is oil can reverse quickly. Hormuz flows remain below pre-war levels, peace efforts remain uncertain, and investors are weighing more rate-hike risk.

Spika’s bullish call therefore rests on a fragile assumption: oil stays low enough, for long enough, to convince the bond market that inflation is losing another source of pressure.