S&P 500 poised to gain 10% by year-end, but trade, AI disruption concerns persist

The S&P 500 stock index will gain about 10% between ⁠now ⁠and the end of the year, driven by ⁠strong earnings and steady economic growth despite ongoing worries about U.S. President Donald Trump’s trade policies and disruption ​from artificial intelligence, according to a Reuters poll.

By the end of 2026, the S&P 500 will be around 7,500, or 9.7% above Monday’s close, according to the median ‌estimate of 44 strategists, analysts and portfolio managers ‌polled in the past week. The index ended Monday at 6,837.75.

The forecast is slightly higher than the target in a Reuters November poll.

If the S&P ends 2026 ⁠higher it would ⁠mark a fourth straight year of gains.

“It’s very difficult right now to point ​to where there’s a lot of weakness,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. The company’s forecast for 7,500 by year-end is based on upbeat U.S. earnings and economic expectations, he said. 

Among risks, Samana said, is a “lingering concern around inflation, and what that means for the Fed.”

The Federal Reserve held interest rates steady last month, ​citing diminished risks to both inflation and employment. Traders have been pricing in a rate cut of at least one-quarter of a percentage ⁠point by ⁠around mid-year.

Nine of 13 respondents to ⁠an extra question in the ​poll said an S&P 500 correction in the next three months was likely.

Marc Dizard, chief investment officer at Huntington Wealth Management, said a ​correction would be “healthy,” as he still expects ⁠the market to end the year at 7,650, about a 12% gain from current levels.

The S&P 500’s price-to-earnings ratio is currently 21.6 times forward earnings, slightly down from 22.5 at the start of the year, based on LSEG data. 

After a strong 2025 that saw the S&P 500 gain about 16%, the market has meandered through the first two months of 2026. Investors have been quick to offload stocks they see as vulnerable to disruption from artificial intelligence tools, particularly software ⁠shares, which have lost roughly 23% since December 31. 

Robert Pavlik, senior portfolio manager at Dakota Wealth Management in Fairfield, Connecticut, ⁠sees AI-related stocks “remaining out of favor for the majority of the year.” But, he wrote, “that out-of-favor view will eventually lead participants back to the ‘fold’ as investors start to see these AI names as having gotten ‘cheaper.’”

Technology is still expected to lead earnings gains, with analysts expecting 33% growth in 2026. S&P 500 earnings growth is expected to come in at 14.8% compared with 14.4% for 2025, according to LSEG.

“Overall, technology should be a profitable sector and that offers some support even though there’s some near-term volatility,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

Trump’s recent statements on trade policy also create uncertainty, strategists said.