A Reuters poll of market strategists published Tuesday forecasts the S&P 500 will rise just 1.3% to 7,620 by the end of 2026. The subdued outlook signals that equity returns are likely to be limited over the next two years, pushing investors to broaden their search for returns beyond traditional stocks.
Why the forecast matters
The poll, which surveyed nearly 40 strategists from major banks and investment firms, marks a sharp slowdown from the double-digit gains the index has posted in recent years. A 1.3% increase would fall well below the index's historical average annual return of roughly 10% before inflation. For retirement savers and fund managers who rely on steady equity appreciation, the projection raises questions about how to hit return targets without taking on excessive risk.
What's driving the sluggish view
Strategists pointed to elevated interest rates, persistent inflation pressures, and stretched valuations as key headwinds. The Federal Reserve's campaign to cool the economy has kept borrowing costs high, squeezing corporate profits and making bonds more competitive with stocks. At the same time, the S&P 500's price-to-earnings ratio remains above its 20-year average, leaving little room for multiple expansion. The poll's median forecast of 7,620 implies that the index will grind sideways for much of the next two years.
Where investors are turning
With equities expected to deliver only modest gains, the poll suggests a growing shift toward alternative assets. Private credit, infrastructure, real estate, and commodities were cited as areas attracting capital. Some strategists noted that hedge funds and pension funds have already begun rebalancing away from large-cap U.S. stocks and into private markets and foreign equities. The move reflects a broader search for yield and diversification in an environment where the easy equity gains of the past decade appear to be fading.
The Reuters poll was conducted between March 10-17 and included responses from strategists at firms including Goldman Sachs, JPMorgan, and Morgan Stanley. The next quarterly survey is due in June, which will offer an updated view on whether the 2026 target holds or shifts. Until then, the message for investors is clear: don't count on the S&P 500 to carry your portfolio.
