The S&P 500 could rise well above current market expectations if the Federal Reserve delivers more aggressive interest-rate cuts, according to JPMorgan.
In its 2026 Global Equity Outlook, analyst Dubravko Lakos-Bujas said the bank is “positive on global equities,” forecasting double-digit gains across both developed and emerging markets. He attributed this outlook to solid earnings growth, lower interest rates, and easing policy pressures.
Lakos-Bujas identified the United States as the primary engine of global equity performance, noting that “the U.S. is set to remain the world’s growth driver,” supported by a resilient economy and an AI-driven investment supercycle that is fueling record capital spending and strong earnings expansion.
JPMorgan also said companies and governments worldwide are accelerating AI spending due to fears of falling behind, calling the trend a “fear of becoming obsolete (FOBO)” dynamic.
For U.S. equities specifically, the bank stated it is “constructive on the S&P 500,” projecting a 7,500 year-end 2026 target and expecting above-trend earnings growth of 13–15% through at least the next two years.
This outlook assumes two more Fed rate cuts followed by a policy pause. However, JPMorgan said the upside could be significantly higher if inflation cools further and the Fed eases at a faster pace. Under those conditions, the bank believes “the S&P 500 surpassing 8,000 in 2026” is a realistic scenario.
Lakos-Bujas acknowledged concerns around high valuations and the possibility of an AI bubble. Still, he argued that today’s elevated multiples reflect expectations for stronger earnings, a major boom in AI-related capital spending, rising shareholder returns, and looser fiscal policy.
He added that the potential gains from deregulation and AI-driven productivity improvements remain “underappreciated.”
While JPMorgan expects strong momentum to continue, the bank also warned that the rapid pace of AI disruption is unfolding within an already uneven K-shaped economy, making investor sentiment more vulnerable to sudden swings.
