JPMorgan Raised Its Forecast for the S&P 500 but Warned of the Risk of "Sudden Crashes"

JPMorgan raised its forecast for the S&P 500 index at the end of 2026 from 7,600 to 7,800 points. This is 6% above the closing level on June 23. During trading on June 24, the index fell by about 0.3%.

According to JPMorgan, the market is approaching a “blue-sky” scenario—the most favorable outcome, Bloomberg reports. The bank’s analysts pointed to accelerating corporate earnings growth amid a boom in AI investments and a resilient U.S. economy, Reuters reports.

At the same time, the bank warned of the risks of “flash crashes”—sharp and sudden drops in asset values, which are usually followed by a rebound, according to Yahoo Finance. The threat stems, in particular, from the disproportionately high share of speculative securities in the AI sector, as well as a potential increase in the supply of shares and a tightening of the Federal Reserve’s monetary policy, notes Business Insider. In addition, two consecutive strong earnings seasons have raised the bar for expectations ahead of the second-quarter 2026 results. “The path upward will be nonlinear, as the market faces a number of hurdles,” Reuters quotes the bank’s note as saying.

The bank's strategists also raised their earnings-per-share forecast for S&P 500 companies to $350 for 2026, representing a 29% increase compared to the same period last year, and expect the figure to rise to $390 in 2027.

“We should have been even more optimistic about the earnings growth prospects for S&P 500 companies,” says Dubravko Lakos-Bujas, head of global market strategy at JPMorgan. According to JPMorgan, consensus earnings forecasts for 2026 and 2027 have risen by about 10% since the start of the year, which is a rare occurrence and is typically seen following major economic shocks or recessions.

JPMorgan analysts maintain a positive outlook on the technology sector and AI companies, including utility providers and select industrial companies, according to MarketWatch. The bank also favors defense and banking stocks. In addition, it believes that the faster-growing segments of the healthcare sector are beginning to look attractive. JPMorgan calls the energy sector “the best geopolitical hedge in the portfolio,” although it acknowledges that after a 19% gain since the start of the year, investors may begin to take profits. Consumer sector stocks may outperform the market, especially if the ceasefire agreement in the Middle East proves to be sustainable, the bank believes.

JPMorgan strategists expect the Fed to keep interest rates at their current levels until 2026, before beginning to raise them in 2027, according to Yahoo Finance.

Despite warnings of potential market crashes, JPMorgan maintains a positive outlook on U.S. stocks and recommends a strategy that combines growth stocks and low-volatility securities, Business Insider reports.

In addition to JPMorgan, at least seven other research firms raised their targets for the S&P 500 in June, Reuters added.

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