MW The 'blue sky' scenario that could take the S&P 500 to 8,000 by year's end, according to JPMorgan

By Barbara Kollmeyer

Strategists bump up their index target after a war-driven downgrade in March

JPMorgan has returned to a higher S&P 500 target, helped by earnings optimism and rebooted investor interest in artificial intelligence stocks.

While an all-clear over the Iran conflict remains elusive, markets have been latching onto hopes on the horizon, which has led to fresh record highs for the S&P 500.

Racing to keep pace with the rebound, JPMorgan has revised upward its S&P 500 SPX forecast to 7,600 by year-end - with 8,000 possibly in play - as well as lifting earnings estimates.

Behind that are expectations for a "more favorable" first-quarter reporting season than last quarter, strategists led by Dubravko Lakos-Bujas told clients in a note on Tuesday.

"In our view, consensus earnings growth has some room for further upside, given that recent positive revisions have been largely driven by a handful of tech companies, as well as energy," they said.

Roughly a month ago, the bank cut its index target to 7,200 from 7,500, citing geopolitical worries. JPMorgan kept earnings per share estimates unchanged, as they saw no deterioration in fundamentals, but the lower S&P 500 target meant a forward multiple of 22 times from 23 times.

And here's where things could get even better.

"Should geopolitical tensions move toward a swift resolution, we would expect the multiple to re-expand back toward 23 times, which would imply an S&P 500 level of 8,000," the strategists said, labelling that a "blue-sky scenario."

They note that while geopolitical de-escalation has helped drive recent S&P 500 highs, appetite for artificial intelligence stocks also is returning. The current level of investor interest in AI stocks is something they haven't seen since the first half of 2025.

Strategists said the roughly 10% correction in the S&P 500 was a "clearing event" for the recent breakout, with companies buying their own stocks at lower prices, leaving other investors having to pile back in and chase gains.

The strategists pointed to news around Anthropic's unreleased Mythos model as a key catalyst, noting that 66% of S&P 500 AI companies have outperformed since April 7. That's amid evidence of rapidly improving models and AI services, a speeding up of Anthropic's annualized revenue pace, and growing expectations for the coming OpenAI Spud release, they say.

"Even the risk of AI-induced job displacement in some of the most sensitive areas (i.e. software engineering) is being put to rest for now as hiring is resuming," say strategists.

The road higher may not be smooth for stocks, though, they caution. "Given the sharp rally from recent lows and a geopolitical backdrop that, while significantly de-escalated, remains in flux, there is a meaningful risk that the market enters a short-term consolidation phase before resuming its upward trajectory," they note.

Their more upbeat view on stocks, given the time needed for a full Iran war resolution and oil prices hovering at $90 a barrel, assumes no "significant new escalation."

As for what to buy, the strategists are sticking to a barbell of heavy bets on quality growth companies, which they say will remain "rich and crowded."

The other half of the barbell are bets on low volatility companies - a substitute for long-duration bonds, given earnings are a "natural hedge to sticky inflation," they say.

The iShares MSCI USA Quality Factor ETF QUAL, with names such as Apple $(AAPL)$, Nvidia (NVDA), TJX $(TJX)$ and Visa (V), has gained 4% this year.

The Invesco S&P 500 Low Volatility ETF SPLV, loaded with utilities such as Pinnacle West (PNW) and Southern Co. $(SO)$, along with Coca-Cola $(KO)$, also has gained 4%.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are rising as oil prices (CL.1) (BRN00) slip. Treasury yields BX:TMUBMUSD10Y are lower and gold prices (GC00) are down $26 to $4,802 an ounce.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              7109.14    3.24%   8.03%   3.85%   37.82% 
   Nasdaq Composite                                                     24,404.39  5.27%   11.20%  5.00%   53.77% 
   10-year Treasury                                                     4.26       0.60    -10.90  8.80    -14.00 
   Gold                                                                 4802.6     -1.27%  7.31%   10.86%  41.59% 
   Oil                                                                  86.86      -5.66%  -1.73%  51.30%  36.70% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Vice President JD Vance and a team of negotiators are headed to Islamabad, though Iran's attendance isn't assured, as the end of a two-week cease-fire looms for Wednesday evening.

Retail sales for March are due at 8:30 a.m., followed by business inventories and pending home sales at 10 a.m.

President Donald Trump's nominee to be the next chair of the Federal Reserve, Kevin Warsh, will begin his Capitol Hill testimony at 10 a.m. Follow our Live Blog.

Amazon stock (AMZN) is rising after the e-commerce giant said it would invest $5 billion in Anthropic now and up to $20 billion more later.

Apple (AAPL) is getting a new CEO in September, with John Ternus, senior vice president of hardware engineering, set to replace Tim Cook.

Dow component UnitedHealth $(UNH)$ lifted its earnings guidance.

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The chart

Yardeni Research's chart shows the S&P 500 Energy Sector XX:SP500.10 underperforming since late 2022, outperforming earlier this year due to the Iran war, then moving lower again after as hopes rose over the conflict ending soon. Yardeni is using that recent selloff to overweight the sector after giving up on it a couple of years ago, mainly as they see Brent crude prices fluctuating between $75 and $95 a barrel once the war ends. Given the time it will take to repair damaged Gulf energy infrastructure and fully reopen the Strait of Hormuz, Yardeni doesn't see oil falling "back to the prewar range of $55-$75 anytime soon."

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   BYND    Beyond Meat 
   AMZN    Amazon 
   GME     GameStop 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   MSFT    Microsoft 
   AMD     Advanced Micro Devices 
   PLTR    Palantir 

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Beyond the newsroom

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-Barbara Kollmeyer

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April 21, 2026 06:51 ET (10:51 GMT)

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