:max_bytes(150000):strip_icc()/GettyImages-2246608610-3ce2c1e3bfd04a588ddcecfe79d95ff4.jpg "Can the S&P 500 Get to 8000? These Experts Say Yes—But It’ll Take Big Rate Cuts")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2246608610-3ce2c1e3bfd04a588ddcecfe79d95ff4.jpg)
Key Takeaways
- JPMorgan stock analysts set a target of 7500 for the end of 2026, which points toward the possibility of another year of double-digit gains for stocks.
- The Federal Open Market Committee would have to deliver more than a half a percentage cut to rates to move the benchmark stock index meaningfully higher, the bank’s analysts said.
What will it take to get the S&P 500 above 8000 next year? More than the two interest-rate cuts JP Morgan expects.
The bank’s analysts broadly expect the benchmark index to finish 2026 at 7500, implying a 10% rise from recent levels; in research published Thursday, the bank said it expects two quarter-percentage point interest-rate cuts from the Fed next year. Further cuts, the bank said, could help the index to 18% gains, matching its recent year-to-date rise.
CME FedWatch puts the highest probability on two cuts by December 2026. Prediction markets put slightly higher odds on three cuts, with Polymarket bettors anticipating rates that come down by three-quarters of a percentage point next year.
WHY THIS MATTERS TO YOU
If stocks at large start posting smaller gains, investors may to start looking elsewhere to make up for the kind of returns to which they’ve become accustomed.
With the S&P 500’s valuations driven upward by artificial intelligence-linked stocks, investors and investment shops have started to ring the alarm on potentially anemic annual returns on the horizon. The benchmark index’s average annual return has been about 10% since the late 1950s, and JPMorgan’s base-case outlook implies investors can bag another year of double-digit gains. Anything beyond that will require a little help from the Fed, according to the bank’s research.
Some investors expect a new Federal Reserve chairman to answer to political pressures and lower rates below the 3% to 3.25% range, but that’s not what JPMorgan analysts were getting at. In their notes, they specified that the their more-bullish outlook for the S&P 500 is based on the assumption that the Fed cuts further due to “improving inflation dynamics.”
Artificial intelligence-linked stocks should stay strong, according to the JPMorgan equity research team led by Ken Goldman. “FOBO,” or Fear of Becoming Obsolete, is driving corporate and government spending, and by the back end of 2026, companies that have adopted the technology should have something to show for it, according to the report.
“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 and monetary policies,” they wrote.
