The S&P 500 is expected to climb only 1.3% to 7,620 by the end of 2026, according to a Reuters poll of market strategists. The modest forecast signals that equity returns over the next two years will be unusually flat, pushing investors to look beyond stocks for yield. Geopolitical tensions and persistent economic headwinds are behind the cautious outlook, the poll found.
Why the Forecast Is So Flat
A 1.3% gain over roughly 18 months would be one of the weakest stretches for the benchmark index in recent years. The Reuters poll, conducted in late March, gathered projections from roughly 40 strategists, who collectively pointed to elevated uncertainty as the main drag. Trade frictions, shifting central bank policies, and uneven corporate earnings growth were all cited as reasons to keep expectations low.
Investors Begin Searching Elsewhere
With the S&P 500 offering what amounts to pocket change in annualized returns, money managers are already pivoting. Private credit, infrastructure debt, and commodities have drawn fresh cash from pension funds and endowments. Some retail investors are moving toward high-yield savings accounts and short-term Treasuries, which now yield more than the projected equity return. The poll's findings reinforce a growing belief that the easy double-digit gains of the post-pandemic years won't repeat soon.
What a 7,620 Target Means
The 7,620 level implies the S&P 500 would trade at roughly 21 times expected 2026 earnings, a multiple that strategists described as reasonable given current interest rates. But the index has already rallied sharply since late 2023, and the poll suggests that further upside will be hard to come by. “The low-hanging fruit has been picked,” one strategist told Reuters. “We’re in a grind-it-out phase.”
Geopolitical risks — including the war in Ukraine, Middle East instability, and the US-China technology rivalry — were flagged as wild cards that could push the index either direction. The poll noted that a majority of respondents see the risks tilted to the downside.
The forecast comes as the Federal Reserve holds rates steady, with inflation still above target. That leaves little room for the kind of monetary easing that typically boosts stock valuations. For now, the message from the poll is clear: don't expect much from the S&P 500 over the next two years.
