JPMorgan sees S&P 500 reaching 7,500 in 2026 — or surging past 8,000 if the Fed keeps cutting rates

Core Viewpoint - JPMorgan's equity strategy team predicts a strong performance for US investors in 2026, with a year-end price target of 7,500 for the S&P 500, potentially exceeding 8,000 if the Federal Reserve continues to cut interest rates [1][3]. Group 1: Earnings Growth and Economic Outlook - The forecast for the S&P 500 reaching 7,500 is supported by expected earnings growth of 13% to 15% over the next two years, with a reported 13.4% earnings growth in the third quarter for S&P 500 companies [2]. - The firm anticipates the Federal Reserve will cut rates two more times, with an 85% market expectation for a rate cut next month, which could lead to an improved inflation outlook and further rate cuts [3]. Group 2: Market Sentiment and Economic Dynamics - The US economy is described as increasingly K-shaped, indicating a widening gap between different income groups, which is reshaping consumer spending habits and confidence [4][5]. - This economic backdrop is expected to create volatility in market sentiment, contrasting the struggles of lower-income consumers with the spending behavior of wealthier individuals who are more exposed to the stock market [6]. Group 3: AI Investment Trends - Corporates and governments globally are racing to invest in AI to enhance productivity and avoid obsolescence, which is seen as a significant trend influencing market dynamics [7].