"Although the index has risen significantly this year, most major institutions on Wall Street remain optimistic about the 2025-2026 period. BNP Paribas forecasts that the S&P 500 could reach 7,500 points by the end of next year if corporate earnings continue to improve, while projections from UBS, JPMorgan, and Deutsche Bank even set higher targets, in the 7,500-8,000 range for 2026. These figures indicate that the market still believes in an upward trend, but they also place the S&P 500 in a sensitive position as many expectations have already been priced into current valuations."
"The likelihood of rate cuts in 2026 is increasing as recent indicators show U.S. growth and consumption gradually cooling. The 10-year Treasury yield has also declined from its previous peak, creating favourable conditions for growth stocks. However, risks cannot be excluded: if inflation unexpectedly reverses or the labour market runs hotter than expected, the Fed may have to delay or slow the pace of rate cuts. In that case, the positive expectations already reflected in equity prices could be easily reversed."
"Regarding corporate earnings prospects, recent data show that profits among companies in the S&P 500 are recovering quite solidly. UBS forecasts earnings could grow 14.4% through 2026. In addition, most companies are showing positive EPS growth, and all 11 sectors are making positive contributions."
The S&P 500 traded choppily around the 6,850 zone after a strong tech-led rally and growing expectations of Federal Reserve rate cuts. Major banks project further gains, with targets ranging from 7,500 to 8,000 over 2025-2026 if corporate earnings keep improving. Market pricing heavily reflects an anticipated 25 basis point cut in December, while declining 10-year yields have aided growth stocks. Rising odds of 2026 cuts accompany cooling U.S. growth and consumption, but unexpected inflation or a hotter labor market could force the Fed to delay cuts and reverse equity gains. Corporate profits are recovering and UBS forecasts earnings growth through 2026, with broad sector contributions and positive EPS trends.
Read at London Business News | Londonlovesbusiness.com
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