Bank of America has warned that the S&P 500 (SPX) will face “modest returns” in 2026, setting a year-end price target of 7,100 that implies upside of about 5% from current levels.
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Head of U.S. Strategy and Quantitative Strategy Savita Subramanian expects the benchmark index to grow its EPS by 14% to $320 next year, although factors like fewer buybacks, increased capital expenditures, and a slower pace of rate cuts will provide liquidity headwinds.
Bank of America Flags ‘AI Air Pocket Ahead’
Bank of America’s bear case price target for the S&P 500 in 2026 is 5,500, while its bull case is 8,500. In addition, the firm warned of an “AI air pocket ahead,” although it believes that the current market environment is different from the period leading up to the 2000 Dotcom bubble because of lower valuations and speculative activity paired with strong earnings growth.
Other Wall Street firms have issued more bullish 2026 price targets in recent days, such as Deutsche Bank’s street-high of 8,000. Furthermore, JPMorgan expects the index to rise to 7,500, while Barclays has a target of 7,400.
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