The biggest bank in America has lowered its forecast for the S&P 500 by the end of the year, citing increasing conflict in the Middle East as a reason why the index likely won’t rise much further.
JPMorgan Chase is lowering its forecast for the S&P 500 at the end of 2026, from 7,500 to 7,200. According to Bloomberg, the bank’s strategists, led by Fabio Bassi, cite concerns that restricted oil supplies through the Strait of Hormuz could hurt company earnings and slow down the US economy.
Since the conflict began, ship traffic through the strait has dropped dramatically, from around 138 vessels per day to just five or six. This represents a decrease of over 95%.
Says Bassi,
Global economic growth is expected to slow down and inflation to remain high due to ongoing geopolitical issues and persistently high energy prices. We advise investors to remain in the market, but to also have some protective measures in place for their stock holdings, and we continue to believe these protections are worthwhile despite a small market decline so far this year.
Bassi notes that the recent rise in oil prices is creating additional challenges for companies, coming at a time when they’re already worried about the impact of artificial intelligence and problems in the private lending market.
If oil prices stay around $110 a barrel until the end of the year, we could see a slight decrease – between 2% and 5% – in expected earnings for companies in the S&P 500. Higher oil prices would likely put even more downward pressure on those earnings. However, the biggest immediate risk to the stock market isn’t a major drop in earnings, but rather investors lowering their expectations for growth and considering the availability of cash, which could lead to lower stock valuations.
As of today, the S&P 500 is at 6,591, which is more than 9% above the bank’s expected value for the end of the year. Currently, a barrel of US crude oil (WTI) costs $95.36.
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2026-03-27 15:02