The S&P 500 could see a high single-digit rise over the next year, according to JPMorgan, which remains optimistic about U.S. equities despite ongoing tariff disputes and signs of economic cooling.
The bank’s forecast rests on three main catalysts: resilient corporate earnings, investor focus on recovery rather than slowdown, and the ability of major companies to adapt to trade policies.
Markets Prioritizing Earnings Over Economic Signals
While U.S. economic growth forecasts have slipped from 2.3% to 1.5% since tariff measures began, the S&P 500 has gained over 28% in just four months. “Markets are looking past short-term economic softness and focusing on the strength of corporate results,” said a senior strategist at JPMorgan.
Corporate Earnings Outperforming Expectations
Recent earnings reports from over 80% of S&P 500 companies show that 82% beat profit expectations and 79% exceeded revenue forecasts, marking the best performance since mid-2021.
Analysts note that full-year earnings expectations for both 2025 and 2026 are rising, with projected growth climbing to 11%—more than double early-year estimates. “The market is differentiating between the winners and losers of trade policies,” JPMorgan’s report stated.
Large Firms Benefiting from Tariff Policies
While smaller, consumer-facing businesses struggle with rigid supply chains and limited pricing power, many large corporations are securing exemptions and even turning tariffs into strategic advantages.
For instance, recent tariff exemptions for certain tech products coincided with a major U.S. manufacturing investment announcement, boosting the stock price of a leading electronics maker by nearly 9% in a week.
Additionally, the One Big Beautiful Act (OBBA) allows companies to claim 100% bonus depreciation on qualified assets, potentially increasing free cash flow by over 30% for some firms—fueling more investment.
JPMorgan’s investment strategy is tilted toward large-cap equities in technology, financials, and utilities. As the bank put it: “Tariffs are not happening in a vacuum—major corporations are adapting faster than expected, and that resilience is a key driver for future gains.”
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