The largest bank in the US is slashing its year-end target for the S&P 500, warning that tensions in the Middle East are limiting the index’s upside potential.
JPMorgan Chase’s team of strategists, led by Fabio Bassi, says the bank is cutting its 2026 year-end target for the S&P 500 from 7,500 to 7,200, noting that the limited oil supply passing through the Strait of Hormuz could negatively impact US corporate profits and economic growth, Bloomberg reports.
Data shows that about five to six vessels a day are passing through the strait since the conflict erupted, down over 95% from the pre-hostilities count of 138 ships.
Says Bassi,
“Geopolitical concerns and higher energy prices for longer will drag global growth lower and inflation higher. We recommend investors to stay invested with downside hedges in equities, and we hold to these hedges given the modest correction year-to-date.”
According to Bassi, the oil price shock adds pressure to corporate earnings growth in a market that’s already facing AI disruption fears and private credit stress.
“On earnings, ~$110 oil through year-end implies a 2–5% trim to S&P 500 consensus EPS, with more pronounced pressure if crude grinds higher. The near-term equity risk is more about multiple compression as investors reassess growth and liquidity than a deep earnings recession.”
At time of writing, the S&P 500 is valued at 6,591, indicating an over 9% upside from the bank’s year-end target. Meanwhile, US Crude Spot (WTI) is trading at $95.36 per barrel.
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