Oil drop may fuel 10% stock rally, strategist says

Whether stock and crypto markets finish 2026 with notable gains may hinge on oil prices, the largest obstacle. On Friday, the US 10-year Treasury yield closed at 5.17%, its highest since 2007, after the Federal Reserve raised rates this month. Such levels typically weigh on equities and digital assets, as investors prefer Treasuries as a safer bet.

Yet David Spika of Turtle Creek maintains that the S&P 500 can still climb an additional 5% to 10% by year-end. His case starts with crude.

Could Oil Prices Fall by December?

On Friday, WTI crude settled near $92, a sharp drop from above $100 earlier this month. Spika argues that if oil keeps declining, inflation pressure should ease accordingly.

This could push long-term borrowing costs lower, giving high-priced stocks more room to run.

Several factors explain the retreat.

• Saudi Arabia has restarted its East-West pipeline, offering an alternative route for its crude 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.

Cheaper oil would come at an opportune moment for markets. On September 16, the Fed raised its benchmark rate by 25 basis points to 3.75%-4%, stating inflation remains elevated.

Spika expects the 10-year Treasury yield to fall toward 4.75%-4.78% if oil continues dropping. 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.