After delivering another strong first half of the year, the S&P 500 has once again become the focal point for Wall Street analysts looking to determine whether the stock market rally can continue or if elevated valuations will eventually trigger a correction. Despite lingering geopolitical risks and uncertainty surrounding monetary policy, many investment banks still see additional upside for the broader stock market before year-end.
With the stock market still being powered by earnings, the latest S&P 500 forecasts suggest Wall Street thinks the stock market rally still has room to run into year-end 2026. Strategists tracked by Reuters, FactSet, and major banks are now mostly pointing to the index finishing 2026 somewhere in the high-7,000s, with a median target near 7,850 and a wide range that stretches from the 7,100 area to more than 8,250. That implies a roughly 5% to 10% upside from recent levels, depending on which stock market forecast you use.
Why Wall Street Keeps Lifting Targets For The Stock Market
The bullish case starts with profits. FactSet’s latest earnings preview said analysts were expecting the S&P 500 to post 23.3% year-over-year earnings growth for Q2 2026, up from 18.8% at the start of the quarter. For the full year 2026, FactSet’s July 2 report put earnings growth at 24.1% and revenue growth at 11.1%. Presently, the index is already trading at a rich valuation. Reuters reported in February that the S&P 500 was priced at 21.6 times forward earnings, only slightly below 22.5 times at the start of the year. In other words, Wall Street is not counting on a big re-rating. Instead, it is counting on companies to keep delivering.
Also, the median year-end target from 44 strategists, analysts, and portfolio managers was 7,500 in February. Technology stocks are expected to lead earnings growth at 33% for 2026, and overall S&P 500 earnings growth is seen at 14.8% in that poll. It doesn’t just end there, as more recent bank calls have moved higher as earnings estimates improved.
Goldman Sachs, for example, said in May that it raised its S&P 500 year-end 2026 forecast to 8,000 from 7,600. This came while the mega bank lifted its earnings-per-share forecast to $340 for 2026, according to its research note. Another mega bank, Citi, later pushed its target to 8,100, and other large firms have also clustered near the 7,800 to 8,100 zone.
The gains are not coming out of nowhere. FactSet said companies in the index increased Q2 earnings estimates by 3.4% during the quarter, which is unusual because estimates usually fall as the reporting season approaches. The report also noted that 63 companies had issued positive EPS guidance versus 48 negative, leaving 57% of guidance positive. This is well above historical averages.
Can Anything Stop The S&P 500 Rally?
Despite Wall Street's positive outlook for the stock market, even the bulls are not ignoring risk. Reuters’ February report also mentioned that 9 of 13 respondents to an extra poll question expected a correction in the next three months. So far, the biggest factors cited are trade policy uncertainty, inflation, and geopolitical tensions as key threats. On the bank side of things, Goldman Sachs warned that valuation multiples may stay close to current levels if bond yields, growth, and policy uncertainty limit further expansion.
For the S&P 500, there are a number of things that bulls should watch next. The first of these is earnings growth to make sure they stay above 20% in the coming quarters. Next is the revenue growth holding in double digits, especially in technology and energy. Lastly, interest-rate expectations need to remain supportive if inflation cools and the Federal Reserve stays on a cutting path. If these factors stay on track, then FactSet’s July 2 preview said Q3 2026 earnings growth could reach 26.8%, with Q4 at 24.4%. At the same time, the full-year S&P 500 earnings growth estimate stood at 24.1%.
These are very strong numbers for the stock market, but they also help explain why the bar for disappointment is rising. One more point that is being made is the fact that the rally is still narrow enough that leadership matters. FactSet said much of the recent upgrade in estimates has been concentrated in the Energy and Information Technology sectors. Thus, if those sectors stumble, the broader S&P 500 forecast could come down quickly, and the stock market could see losses instead.
If you want a broader guide to how valuations, risk, and portfolio sizing fit together, see Wealthier Today’s risk-reward guide and our explainer on how to start your investment journey.