JPMorgan Sees More Upside for S&P 500 Despite Trump’s Tariffs and Slowing Economy
JPMorgan expects the S&P 500 to deliver high single-digit gains over the next year, remaining optimistic on U.S. equities even as economic concerns rise due to President Donald Trump’s tariff policies.
Despite signs of an economic slowdown, markets are holding strong. JPMorgan analysts believe investors are focused on strong earnings and signs of recovery rather than short-term macro weakness.
Resilient Market, Slowing Growth
Since Trump’s tariff measures began in early April, U.S. GDP growth forecasts have dropped from 2.3% to 1.5%. Yet, the S&P 500 has rallied over 28% in that span, showing strong resilience even as recent data reveals sluggish job growth, cautious consumer spending, and persistent inflation in the manufacturing and service sectors.
“Markets are looking beyond immediate growth concerns,” JPMorgan said, pointing to optimism driven by corporate profitability and expectations of an economic rebound.
Earnings Outperform Across the Board
A major factor behind the bullish sentiment is strong second-quarter earnings. Over 80% of S&P 500 companies have reported, with 82% beating profit expectations and 79% topping revenue forecasts — the best results since Q2 2021.
Wall Street initially forecast earnings growth of less than 5% for Q2. However, the actual rate is closer to 11%, suggesting stronger fundamentals than anticipated. JPMorgan noted that full-year profit estimates for 2025 and 2026 have already started rising, reinforcing confidence in the broader market.
Trade War’s Impact Uneven
JPMorgan’s analysis shows that larger firms are faring far better under Trump’s trade policies than smaller, consumer-focused companies. While mid-sized firms with limited pricing flexibility and rigid supply chains are struggling, major corporations are adapting—and in some cases benefiting.
Some, like Apple, have received exemptions from new tariffs. The company recently committed another $100 billion to U.S. manufacturing and saw its stock climb nearly 9% in a week.
In another example, Trump proposed a 100% tariff on imported semiconductors to incentivize companies to move production to the U.S.—a policy likely to favor large domestic producers.
Moreover, large firms are gaining from the One Big Beautiful Act (OBBA), which allows for full bonus depreciation of qualified business assets and immediate expensing of domestic R&D. JPMorgan notes this could increase free cash flow for certain firms by more than 30%, encouraging further investment.
As a result, JPMorgan’s investment strategy remains focused on large-cap equities, especially in tech, financials, and utilities — sectors well-positioned to handle ongoing trade-related shifts.
Crypto May Benefit From Bullish Equities
JPMorgan’s upbeat stock market outlook may also support crypto markets, which often trend alongside equities. Digital assets are already seeing positive momentum, aided by a friendlier regulatory stance from the Trump administration.
Recently, the SEC clarified that under certain conditions, liquid staking does not fall under securities regulations — a ruling that has boosted optimism for staking-based ether ETFs.
Ether has surged more than 13% to above $4,200 — a price not seen since 2021 — and is up nearly 50% over the past month, according to CoinDesk data.
