Wall Street likes what it’s seeing out of the U.S. economy. The unemployment rate in December fell to 4.4%, while the core consumer price index , which strips out food and energy, rose less than expected last month. On top of that, the Federal Reserve is expected to lower its benchmark overnight rate twice in 2026, according to the CME Group’s FedWatch gauge . Bank of America’s Ebrahim Poonawala referred to this as a “‘ run-it-hot’ U.S. economy ,” noting that greater tax refunds and broad credit availability can bolster growth this year. Jefferies strategist Steven DeSanctis also sees the economy picking up, advising clients load up on cyclical stocks. “Cyclicals are off to good start after disappointing down stretch in ’25, lagged. A sticky 10-year, solid GDP growth, higher commodity prices, steeper curve, improving LEIs support [the] theme, not to mention how cheap the cohort is,” he said in a note to clients. “We think earnings growth will broaden and come in above average, that bolsters our case for the Cyclicals. If we are truly entering a commodity boom, Cyclicals should thrive.” Jefferies highlighted 14 cyclical stocks it likes for 2026. Here are five: Of the five stocks listed above, Albemarle is the best performer, rising more than 86% over the past year, thanks to strong demand for lithium in China. “Chinese lithium carbonate and hydroxide prices have risen ~70% since early 2025,” Jefferies wrote. “Prices in other regions now have started to move higher. … Lower interest rates and other stimulus initiatives, particularly in the US, appear increasingly likely to unleash pent-up demand sooner.” Logistics giant XPO has lagged the broader market, up 10% in the past 12 months versus a 16% gain in the S & P 500 , but Jefferies sees improvements ahead for the company. “While our base case call for 100bps of [less-than-truckload organic revenue] improvement in 2026 to 83% as tons/day remain down 1-2% [year over year], our bull case estimate would see OR improve 250bps in 2026 to just over 81% as tons/day inflects to positive 2% for the year with volume growth accelerating to 4% in 2027 and an additional 100-150bps of OR improvement to 80% by 2027,” the bank said.
