JPMorgan Sees More Gains for S&P 500 Despite Trump-Era Tariff Pressures
JPMorgan remains bullish on U.S. equities, forecasting the S&P 500 will deliver high single-digit returns over the next 12 months—even as economic headwinds from President Donald Trump’s tariff measures begin to surface.
The investment bank’s outlook is anchored in three core factors: market resilience in the face of slowing growth, robust corporate earnings, and the adaptability of large-cap firms to shifting trade dynamics.
Markets Defy Slowdown Warnings
Despite a downgrade in U.S. GDP forecasts—from 2.3% to 1.5% since Trump’s initial tariff announcement on April 2—the S&P 500 has surged more than 28%. Markets appear to be shrugging off weaker labor and consumer data, as well as persistent inflation in the manufacturing and service sectors.
Rather than fixating on macro deterioration, investors are focusing on earnings strength and early signs of recovery, according to JPMorgan analysts.
Strong Earnings Drive Optimism
Second-quarter earnings have significantly outperformed expectations. Over 80% of S&P 500 companies have reported so far, with 82% beating earnings forecasts and 79% exceeding revenue projections—marking the strongest quarterly showing since Q2 2021.
Wall Street initially anticipated sub-5% earnings growth, but the index is now tracking closer to 11%. JPMorgan notes that full-year profit forecasts for both 2025 and 2026 are trending higher.
“The market is beginning to distinguish between companies that are weathering the trade war and those that are more exposed,” the bank noted in a Friday commentary.
Big Companies Turn Tariffs Into Tailwinds
Larger corporations have proven more resilient in the face of tariffs, benefiting from exemptions and shifting supply chains to their advantage.
Apple, for example, avoided new import tariffs and simultaneously announced an additional $100 billion investment in U.S. manufacturing, sending its shares nearly 9% higher for the week.
Trump’s latest move—a 100% tariff proposal on imported semiconductors unless companies commit to U.S. production—further highlights the policy’s uneven impact. While smaller, consumer-facing firms with limited leverage are struggling, major players are adjusting effectively.
Big companies are also benefiting from incentives like the One Big Beautiful Act (OBBA), which allows 100% bonus depreciation on qualified business assets and immediate expensing of R&D costs. This could boost free cash flow by over 30% for some firms.
As such, JPMorgan is focusing its investment strategy on large-cap equities, particularly in technology, financials, and utilities—sectors seen as best positioned for this evolving macro landscape.
Crypto Outlook: A Side Benefit?
A strong equity market outlook could support crypto prices, which often move in tandem with risk assets. Crypto is already enjoying regulatory momentum under the Trump administration, with the SEC recently ruling that certain forms of liquid staking fall outside securities law—boosting hopes for a spot ether ETF approval.
Ether has rallied more than 13% to above $4,200, and has gained nearly 50% over the past month, according to CoinDesk data.
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