Three Reasons JPMorgan Expects the S&P 500 to Continue Its Upward Momentum

JPMorgan Forecasts Further Gains for S&P 500 Despite Trade Headwinds

JPMorgan is maintaining a bullish stance on U.S. equities, projecting a high single-digit return for the S&P 500 over the next 12 months. The forecast comes even as concerns grow over the potential economic drag from President Donald Trump’s aggressive tariff policies.

The investment bank points to three key drivers behind its outlook: market resilience in the face of softening economic indicators, robust corporate earnings, and the relative strength of large-cap companies navigating trade-related disruptions.

Markets Shake Off Economic Concerns

Despite signs of a slowing economy, including weaker labor market data and persistent inflation in both the manufacturing and service sectors, the stock market has powered higher. Since the first round of tariffs was introduced in April, GDP forecasts for the year have fallen from 2.3% to 1.5%. Yet, the S&P 500 has jumped more than 28% in that time.

According to JPMorgan, markets are largely ignoring macroeconomic pessimism in favor of a more earnings-focused recovery narrative. “Investors are looking past the slowdown and betting on strong corporate fundamentals to carry markets higher,” analysts noted.

Earnings Power the Rally

A key reason for investor optimism is the strength of corporate earnings. Over 80% of S&P 500 companies have now reported Q2 results, with 82% exceeding profit expectations and 79% surpassing revenue forecasts — the strongest quarterly performance since mid-2021.

Initially, Wall Street anticipated earnings growth of under 5% for the quarter. But with actual results pointing closer to 11%, JPMorgan says this earnings momentum is a major tailwind.

“The full-year earnings projections for both 2025 and 2026 are already trending higher,” the firm’s wealth management team stated. “Investors are also becoming more selective, rewarding companies that are insulated from trade-related risks.”

Tariffs Hit Small Firms, Not Giants

JPMorgan’s third reason for optimism centers on how larger companies are adapting to—or even benefiting from—tariff policy. While smaller, consumer-focused firms are facing pressure from limited pricing power and rigid supply chains, multinational giants are demonstrating resilience.

In some cases, large corporations are securing tariff exemptions or using policy changes to justify reshoring supply chains. Apple, for instance, received a waiver from recent tariff hikes on Indian goods and subsequently announced a $100 billion expansion of its U.S. manufacturing footprint. Its stock jumped nearly 9% this week.

Meanwhile, the “One Big Beautiful Act” (OBBA) is providing additional incentives for domestic investment. The legislation allows companies to fully expense capital expenditures and research & development costs, a provision that analysts say could boost free cash flow by over 30% for some firms.

As a result, JPMorgan remains overweight on large-cap equities, particularly within technology, financials, and utilities — sectors it believes are best positioned to thrive amid evolving trade dynamics.

Crypto Outlook Tied to Broader Market Optimism

The bullish equity outlook could also provide a boost to the crypto market, which has historically moved in correlation with risk assets.

The regulatory environment is becoming more favorable as well. The Trump administration has appointed several crypto-supportive figures to top regulatory posts. In a recent decision, the SEC ruled that under specific conditions, liquid staking does not fall under securities law, raising hopes for the approval of staking-based ether ETFs.

Ether has responded positively, rallying over 13% to reclaim levels above $4,200 — a milestone not seen since 2021. Over the past month, ETH has surged nearly 50%, according to CoinDesk data.

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