JPMorgan has reaffirmed its year-end target for the S&P 500 at 6,500 but acknowledged that it may take longer to reach this level than initially expected, Market Watch reports.
Despite the bank’s previous cautious stance, which included a departure from former strategist Marko Kolanovic’s bearish views, the current forecast would require a 13% increase in the index from its current level of 5,738.52 after a 1.8% drop on Thursday.
The strategists led by Dubravko Lakos-Bujas emphasized that while the 6,500 target remains, there is considerable uncertainty surrounding the prediction, with the possibility that the S&P 500 may not reach this target until 2026. For now, they anticipate the market will remain range-bound between 5,200 and 6,000 points but expect growth later in the year.
JPMorgan’s team continues to assess a low risk of recession, attributing recent market fluctuations to policy-induced growth concerns and a rapid adjustment to lower borrowing rates, oil prices, and a weakening US dollar. These factors are expected to support risk assets, boosting sectors like housing, retail, and autos. The yield on the 10-year Treasury has decreased nearly 30 basis points in 2025, while oil prices have dropped 7%, and the US dollar index has retreated 4%.
Additionally, markets are predicting three Federal Reserve rate cuts in the coming months, which could offer further support to economic growth while reducing inflationary pressure and addressing the budget deficit. The analysts also note that potential geopolitical shifts, such as a resolution to the Russia/Ukraine conflict, could further aid in lowering inflation and yields.
The bank’s report also pointed to corporate earnings and consumer resilience as critical factors in weathering market volatility. A combination of solid earnings growth, labor market strength, and increasing capital spending in the US, as well as defense spending in Europe, easing in China, and pro-growth reforms in Japan, are expected to provide a foundation for growth.
Furthermore, JPMorgan highlighted the accelerating impact of artificial intelligence, particularly in the US and China. The analysts believe that the market is underestimating the earnings growth potential driven by AI-driven productivity gains, especially in sectors like hyperscalers and software.
In terms of investment strategy, JPMorgan advised holding a balanced portfolio of bond proxies, such as utilities and consumer staples, alongside stocks that stand to benefit from lower rates, such as regional banks and real estate. The firm has reduced its position in large-cap banks and shifted consumer discretionary stocks to a neutral rating.
