NEW YORK – Wall Street analysts anticipate the S&P 500 will conclude 2026 with modest gains above current record territory, though ongoing Middle East conflict poses risks through potential energy price spikes and inflation pressures.
A Reuters survey of 47 market professionals conducted between May 15-26 projects the benchmark index will reach 7,620 by year’s end, marking a 1.3% climb from Tuesday’s closing price of 7,519.12. Looking ahead to mid-2027, these experts predict the index could hit 8,050.
This represents a slight upward revision from February’s poll, when a comparable group of analysts targeted 7,500 for the year-end close.
Recent weeks have seen the S&P 500 achieve multiple record highs, buoyed by robust first-quarter corporate earnings and optimism about continued strong performance throughout the year. Hope for diplomatic progress in ending the U.S.-Israel conflict with Iran has also supported market sentiment.
Anthony Saglimbene, chief market strategist at Ameriprise, noted the positive momentum: “We have strong AI secular tailwinds that were confirmed through the earnings we saw, and it helped stocks recover off the March lows.”
However, he cautioned about emerging headwinds: “What’s different now is we have higher energy prices, rates moving higher, and we are seeing inflation becoming more entrenched.” Saglimbene maintains a 7,500 year-end projection for the S&P 500.
Peace negotiations have faced significant obstacles. Iran accused the United States Tuesday of ceasefire violations following strikes near the strategically important Strait of Hormuz.
Inflation concerns stemming from the conflict have driven bond yields substantially higher recently, increasingly influencing interest rate expectations. Futures markets now factor in the possibility of a Federal Reserve rate increase later in 2026, contrasting sharply with earlier expectations for investor-friendly rate reductions.
Despite these concerns, most survey participants don’t anticipate an immediate market downturn. Among 13 respondents to an additional question, nine deemed an S&P 500 correction unlikely over the next three months, while only four considered it probable.
Both the Nasdaq Composite and Dow Jones Industrial Average experienced corrections in March, declining at least 10% from their respective peaks.
The poll projects the Dow will finish 2026 at 52,500, compared to Tuesday’s close of 50,461.68.
Strong corporate earnings and renewed artificial intelligence sector enthusiasm have enabled investors to largely overlook surging oil prices, military conflicts, and other negative influences.
Semiconductor companies have posted dramatic gains since January, with a chip industry index climbing more than 80% from December’s end.
AI leader Nvidia recently projected second-quarter revenue exceeding Wall Street expectations while announcing an $80 billion stock buyback initiative. CEO Jensen Huang sought to reassure investors about the world’s most valuable company’s ability to sustain explosive growth.
Profit growth expectations for 2026 have surged from 16% in early January to nearly 25% last week, according to LSEG data. The last time annual earnings growth reached such levels was 2021, following early pandemic disruptions, noted Tajinder Dhillon, head of earnings research at LSEG.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, emphasized the AI investment cycle’s impact: “Whether or not the investment in AI ultimately pays off… most – if not all – major companies are racing to get ahead of, and better understand, the new technology, and that AI arms race will likely lead to higher prices in the short run.” He forecasts the S&P 500 will reach 8,300 by year-end.
