Jefferies says this S&P sector ’should outperform again’ in 2026

Investing.com -- Jefferies expects one sector to extend its strong run into next year, arguing that the forces behind 2025’s rally remain firmly in place and should continue to support performance in early 2026.

The S&P 500’s metals and mining sector has been one of the year’s standout winners.

Jefferies analyst Christopher LaFemina said stocks under his firm’s coverage have delivered “a total return of 57.2% on avg,” driven by “constrained supply, the emergence of a new demand driver related to electrification, and the start of a Fed rate cut cycle in the midst of a relatively strong economy.”

According to the firm, those same tailwinds are unlikely to fade soon. In its latest Mining Minutes note, Jefferies wrote that “the sector should outperform again as a result,” pointing to ongoing tightness in metals supply and continued momentum from electrification-linked demand.

LaFemina also highlighted sharp moves in metals markets, which it said may signal a broader shift ahead.

The “very strong performance in certain metals prices” could be an early sign of “an improving outlook for the global economy,” the analyst said.

However, he warned that the rally may also reflect inflationary pressure, suggesting metals could be hinting at the need for a deeper easing cycle.

“Could metals markets be telling us that we will need a massive Fed easing cycle to bail out the economy again?” asked LaFemina. “Seems unlikely at this point, but recent price moves simply cannot be fully explained by fundamentals.”

You May Also Be Interested In

• Gap taps Coach architect Reed Krakoff for $29.95-$498 handbag line
• Micron shares slide following Taiwan incentive pay report and tech sector sell-off
• Knorex to add AI chat interface and MCP server to ad platform