Catenaa, Wednesday, November 26, 2025- JPMorgan expects the S&P 500 to reach the 7,500 level by the end of 2026 and surpass 8,000 if the Federal Reserve continues cutting rates.
The firm’s equity strategy team, led by Dubravko Lakos-Bujas, set a year-end price target of 7,500 for the S&P 500 in 2026, and should the Federal Reserve continue cutting interest rates, however, the bank thinks the S&P 500 could surpass 8,000 in the year ahead.
“Despite AI bubble and valuation concerns, we see current elevated multiples correctly anticipating above-trend earnings growth, an AI capex boom, rising shareholder payouts, and easier fiscal policy (i.e. [One Big Beautiful Bill Act]),” the firm wrote in a note to clients published Tuesday.
“More so, the earnings benefit tied to deregulation and broadening AI-related productivity gains remains underappreciated.”
JPMorgan’s 7,500 call for next year is primarily supported by expected earnings growth of between 13% and 15% over the next two years.
In the third quarter, S&P 500 companies grew earnings by 13.4% from the prior year, according to FactSet data.
The firm’s baseline outlook also sees the Fed cutting rates two more times — markets were pricing in an 85% chance the Fed cuts rates next month as of Wednesday morning — before an extended pause.
An improving inflation outlook that prompts more rate cuts is what JPMorgan sees catalyzing a rise toward, and above, 8,000 for the benchmark index.
The firm’s call that the S&P 500 will reach 7,500 next year also makes it the second Wall Street bank this week to put that target on the index for 2026, with strategists at HSBC making the same forecast in a note published Monday.
The S&P 500 gained on Wednesday, with the index reaching the 6,800 mark.
