Oil Price Slide Could Spark 10% Stock Market Rally, Strategist Says

Wall Street strategist David Spika believes that if oil prices continue to fall, it could trigger a 10% rally in the S&P 500 before year-end. The current US 10-year Treasury yield is at its highest level since 2007, which is usually bearish for stocks and cryptocurrencies.

The yield rose to 5.17% after the Federal Reserve raised rates this month. However, Spika argues that falling oil prices could ease inflation pressure, leading to lower long-term borrowing costs and allowing expensive stocks to recover.

Oil prices have already fallen sharply, with WTI crude closing at $92 on Friday, down from levels above $100 earlier in the month. The retreat is due in part to Saudi Arabia's decision to restart its East-West pipeline, giving it another route around the Strait of Hormuz.

If oil prices continue to fall, Spika predicts that the 10-year Treasury yield could drop to 4.75%-4.78%. He recommends investing in stocks with strong earnings growth, such as Microsoft and Berkshire Hathaway, which held $365.5 billion in cash and short-term Treasurys at the end of June.