A Wall Street strategist is eyeing a late-year lift for stocks as investors weigh artificial intelligence winners and the path of interest rates. Morgan Stanley senior vice president of investments Jim Lacamp joined the Fox Business program Mornings with Maria to frame what could drive a holiday rally and how 2026 may look for stocks and housing.
“Morgan Stanley senior vice president of investments Jim Lacamp joins ‘Mornings with Maria’ to discuss a potential Santa Claus rally, AI-driven market gains and why the outlook for interest rates could shape stocks and housing in 2026.”
The conversation comes as investors track seasonal trends, leadership from big tech, and shifting expectations for rate cuts. The stakes are high for households and companies planning for the next two years.
Seasonal Tailwinds And What They Mean
Investors often talk about the “Santa Claus rally,” the pattern where stocks can rise late in December and into the start of January. The effect is not guaranteed, but the period has shown a positive bias in many years. Fund flows, tax-loss harvesting, and lighter holiday trading can add to the move.
For investors, the focus is on whether market breadth improves. If more sectors join any year-end strength, the move can feel sturdier. If only a few mega-cap names climb, the rally can fade when volumes normalize in January.
AI Remains A Major Driver
AI-linked firms have powered much of the market’s gains this cycle. Chipmakers, cloud providers, and software companies tied to AI spending have reported strong revenue growth. Investors are trying to separate long-term winners from hype.
Valuation is the central risk. If earnings catch up to lofty prices, leadership can last. If revenue growth slows, high-multiple shares can slip. Some managers are also watching power capacity, supply chains for advanced chips, and regulation as swing factors for 2025 and 2026.
- Leaders: semiconductors, cloud infrastructure, select software.
- Watch risks: valuation, supply bottlenecks, policy rules on data and safety.
Lacamp’s focus on “AI-driven market gains” highlights how key this theme remains for portfolios into the new year.
Rates, Stocks, And Housing In 2026
The rate path is the link between Wall Street and Main Street. If inflation cools, central bankers can ease policy over time. If price pressures stick, rates may stay higher for longer.
For stocks, lower rates can support higher valuations, especially in growth sectors. Cheaper capital can help deal activity and share buybacks. But inflation shocks or sticky services prices can keep yields firm and cap multiples.
Housing is even more rate sensitive. Higher mortgage costs have slowed sales, boosted monthly payments, and kept many owners from listing. If borrowing costs decline into 2025 and 2026, affordability could improve and inventory might rise as more owners feel comfortable selling. A move the other way would keep pressure on first-time buyers.
Lacamp’s point that the “outlook for interest rates could shape stocks and housing in 2026” reflects how central rate policy remains. The timing and pace of any rate cuts will guide equity risk appetite and the housing recovery.
What Investors Are Watching Now
Markets are forward-looking. Positioning today reflects guesses about earnings, inflation, and credit conditions a year from now. A few signposts stand out.
- Earnings guidance from AI leaders and old-economy firms.
- Inflation trends in services, wages, and housing costs.
- Credit conditions for consumers and small businesses.
- Mortgage applications and new-home supply.
Stability in corporate margins could support a broad advance. A squeeze from higher labor or interest costs could hit cyclicals first.
Balancing Opportunity And Risk
Investors who expect a holiday lift may still trim concentration risk. Exposure across sectors can help if leadership rotates away from mega-cap tech. Cash yields remain attractive, giving savers a buffer while they wait for clearer signals on rates.
For homebuyers, rate moves will dictate timing. Pre-approval, rate locks, and flexible closing windows can help manage uncertainty. Sellers may find more buyers if mortgage costs ease and inventory improves.
Lacamp’s appearance highlights three linked ideas: seasonal strength, AI leadership, and the rate path into 2026. A broad year-end rally would signal healthier participation. AI remains a growth engine, but valuation discipline matters. The biggest swing factor is still interest rates. Watch inflation data, central bank guidance, and mortgage trends for the next cue.
