JPMorgan raises S&P 500 target to 7,800, but warns of 'flash crash'

The AI supercycle and net revisions are expected to nonstop the S&P 500 (^GSPC) higher this year, but the way to getting determination won't beryllium a consecutive line, JPMorgan strategists said.

The firm's mid-year planetary probe outlook report, released connected Wednesday, notes that with the United States and Iran moving toward a bid deal, "we are approaching our "Blue Sky" script and expanding our S&P 500 year-end terms people to 7,800."

The steadfast antecedently forecast the scale would scope 7,600. The caller people represents astir a 6% summation from Tuesday's close. But the roadworthy to getting determination whitethorn beryllium bumpy, with respective hurdles inactive to clear.

JPMorgan strategists expect the Federal Reserve to support involvement rates dependable done 2026 earlier yet pivoting to complaint hikes successful 2027. The steadfast anticipates that banal marketplace enactment volition stay highly concentrated successful large-cap Quality Growth and nonstop AI plays.

The outlook warns that speculative momentum trading successful secondary AI stocks has go truthful utmost that the marketplace "is astatine hazard of a reversal and continues to look precocious probability of a flash-crash." A flash clang occurs erstwhile determination is simply a sudden, steep driblet successful plus prices, usually followed by a rebound.

Still, the strategists said "the cardinal backdrop remains beardown and investors should usage method weakness arsenic a buying opportunity."

JPMorgan raised its 2026 S&P 500 EPS estimation to $350, representing a 29% year-over-year surge. The upgrade is driven by an unprecedented question of upward net revisions and a adjacent doubling of AI-related superior expenditure budgets among exertion hyperscalers.

The steadfast said its recognition paper spending metrics bespeak that user fundamentals are holding up, adjacent arsenic institution commentary points to a much bifurcated, value-conscious user alternatively than broad-based strength.

The S&P 500 (^GSPC) is up astir 8% year-to-date, and 16% from the March 30 lows. Most of the gains person travel from the Tech (XLK) sector, which is up 27% since the commencement of the year, with semiconductor stocks leading.

Ines Ferre is simply a elder concern newsman for Yahoo Finance. Follow her connected X astatine @ines_ferre.

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