Wall Street strategists have largely maintained their S&P 500 forecasts for the end of 2026 despite rising Treasury yields, geopolitical tensions and renewed concerns about artificial intelligence spending.
A Bloomberg survey of 19 equity strategists found that the average year-end target declined slightly to 7,967 points from 7,976 in September, a reduction of just nine points.
The forecast implies approximately 4.5% upside from the index’s October 23 closing level of 7,623.68 and would represent an annual gain of around 16%, potentially marking a fourth consecutive year of double-digit returns.
Market Uncertainty Leaves Forecasts Largely Unchanged
Only two of the 19 strategists surveyed revised their forecasts, with one raising their target and another lowering it.
The stability comes despite the 10-year US Treasury yield briefly exceeding 5%, disruption to energy markets from the Iran conflict and a technology selloff driven by questions surrounding the sustainability of AI investment.
“Being a strategist can be challenging at the best of times. But right now it feels as if we have to update our views at minimum on a weekly basis, if not even more,” said HSBC strategist Max Kettner.
S&P 500 Remains Below October Record
The S&P 500 reached a record closing high of 7,818.93 on October 6 but finished October 23 approximately 2.5% below that level.
Technology stocks contributed to the weakness, particularly during Thursday’s selloff, when renewed concerns about AI financing pushed Meta shares down more than 7%.
Despite the volatility, Kettner suggested that declining bond yields could ease pressure on equity valuations.
“Lower yields should also give valuations some reprieve. So any dips related to the above two factors – as well as further likely turmoil in France – will likely be a good buying opportunity in the next few weeks again – more for equities than credit though,” he added.
Earnings Beats Offer Limited Reassurance
Third-quarter earnings have provided mixed signals for investors.
According to FactSet, approximately 24% of S&P 500 companies had reported results by Friday, with 83% exceeding earnings-per-share expectations, above the five-year average of 78%.
However, the average earnings surprise was just 2.1%, considerably below the five-year average of 7.5%.
Wells Fargo described the opening phase of the reporting season as among the weakest on record in terms of the magnitude of earnings surprises.
“While we expect solid results, companies’ ability to provide reassurance on the outlook amid macro headwinds will likely be a bigger driver of performance this quarter,” said Bank of America strategist Savita Subramanian.
The survey suggests that Wall Street remains optimistic about further equity gains in 2026, although earnings guidance, interest rates and technology valuations could determine whether the S&P 500 reaches its year-end target.