U.S. bank JPMorgan Chase raised its year-end forecast for the Standard & Poor's (S&P) 500 index to 7,800 from 7,600, reflecting corporations' solid profit growth trend this year.
According to Bloomberg on the 24th (local time), the newly presented target is about 6% higher than the previous day's close (7,365.46).
Dubravko Lakos-Bujas, Head of Team overseeing global market strategy at JPMorgan Chase, cited the overall improvement in listed companies' earnings outlooks as the basis for this upward revision. In a note to investors, Lakos-Bujas noted that the average earnings forecasts for corporations in 2026 and 2027 have each jumped nearly 10% from the start of the year.
Lakos-Bujas said such a swift, positive reversal in earnings expectations is very rare, typically observed only right after emerging from a severe economic shock or a recessionary tunnel. He added that, in hindsight, they may have assessed the S&P 500 corporations' profit-generating capacity too conservatively.
Lakos-Bujas analyzed that this "positive shock" took hold during the first-quarter earnings reporting season. At the time, many corporations laid out larger capital expenditure plans for future growth, and artificial intelligence (AI) startup Anthropic and others successfully proved AI technology's real revenue model, which he said became a decisive catalyst that changed market sentiment.
However, he did not forget a note of caution amid the optimism. Lakos-Bujas advised, "Even if the index keeps rising, the path won't be as smooth as a straight line." For the stock market to make further strides, several current economic hurdles must first be resolved.
He also projected that heading into the upcoming second-quarter earnings season, investors' expectations are already so high that it has become much harder than before to deliver an "earnings surprise" that truly astonishes the market with decent results or detailed figures on investment expansion.