The US stock market and gold are on track to achieve a rare feat of delivering double-digit percentage gains for four consecutive years, a historic level of strength that has captured the attention of top Wall Street strategists.

A team led by Bank of America's chief investment strategist, Michael Hartnett, points out that the S&P 500 index could achieve an annualized gain of 20%, while gold could record a 30% annual increase. Such sustained, "large-scale" multi-year rallies are extremely rare in history.

For US stocks, similar sustained large-scale rallies have occurred only three times: during World War II, the post-war period of peace dividends, and the tech bubble era from 1995 to 1999. Gold's prolonged periods of strength have primarily been concentrated during the stagflation phase of the 1970s.

In terms of market performance, both the Nasdaq and the S&P 500 recently hit new all-time highs. The S&P 500 started the year at 6,858 points, reaching a peak of 7,394 points, representing a cumulative gain of approximately 7.8%. The Nasdaq started the year at 23,236 points, peaking at 26,144 points, for a cumulative gain of around 12.5%.

Regarding gold, the spot price started the year at $4,332 per ounce. Based on the BofA team's forecast of a 30% annual gain, the corresponding target price would be $5,631.6 per ounce. Although the gold price recently corrected to $4,734 per ounce, it had earlier in the year reached a historic high of $5,598.8 per ounce, coming within about $32.8 of the aforementioned theoretical target.

Regarding market implications, the Hartnett team's latest assessment is that small-cap stocks, emerging markets, and commodities have all reached a "bullish long-term inflection point," with the materials sector explicitly named as the next area poised for strength.

Market Rotation Accelerates, Materials Sector Emerges as Next Leader

In recent years, the strong performance of US stocks has been primarily driven by mega-cap technology stocks. The capital expenditure boom in artificial intelligence has been the core driver of the latest rally, with extremely high concentration, where a handful of stocks have contributed the majority of the gains.

However, market breadth is improving, with other sectors and asset classes also showing more pronounced upward momentum. Small-cap stocks, emerging market equities, and commodities are all viewed by the team as being at a "bullish long-term inflection point," underpinned by the resilience shown by the US economy. Consensus market forecasts indicate that the US economy's nominal growth rate could reach 5.5% this year, with corporate earnings growth projected at 20%, providing fundamental support for a broader market advance.

In terms of specific sector allocation, the BofA team identifies materials stocks as the next strong area poised to rise. Currently, the materials sector accounts for only about 2% of the S&P 500 index weight, near its lowest level in nearly 30 years. The Hartnett team believes this dynamic is about to change. Driving factors span multiple dimensions: geopolitically driven competition for resources, rising global military spending, raw material demand driven by the AI capital expenditure boom, and demand for construction materials as countries address housing shortages.