S&P 500 to hit 7,700 by the end of 2026, UBS managing director predicts

Key Concepts

• S&P 500 Forecast: Projected growth to 7300 by mid-next year and 7700 by the end of next year.
• Federal Reserve (Fed) Policy: Anticipation of dovish policy and at least two rate cuts.
• Tax Cuts: Expectation of forthcoming tax cuts contributing to economic growth.
• Inflation Moderation: Belief that inflation will moderate and decrease.
• Commodity Focus Shift: Moving away from precious metals (gold, silver) towards industrial metals and energy.
• Energy Sector Underinvestment: Significant underinvestment in energy infrastructure.
• Oil Price Forecast: Expectation of oil prices reaching a minimum of $67 per barrel.

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S&P 500 Performance Outlook

Jason Katz predicts a substantial increase in the S&P 500 over the next year. He forecasts the index reaching 7300 by mid-next year and escalating to 7700 by the end of next year. This optimistic outlook is predicated on a confluence of favorable economic factors. He acknowledges a potential for a non-linear, yet ultimately upward, trajectory.

Drivers of S&P 500 Growth

Several key elements are expected to drive this growth. Firstly, a shift towards a “dovish Fed chair” is anticipated, leading to at least two interest rate cuts. Secondly, forthcoming tax cuts are expected to stimulate economic activity. Thirdly, a moderation of inflation is projected, alleviating economic pressures. Finally, diminishing fears surrounding tariffs and a more business-friendly environment facilitated by deregulation are also considered significant contributing factors.

Katz believes that S&P earnings will likely grow by more than 10% as a result of these factors. He states, “If they do grow 10%, we're looking at S&P that trades higher.” This earnings growth is directly linked to his S&P 500 price targets.

Shifting Commodity Focus: From Precious Metals to Energy

While gold and silver have garnered attention this year, Katz argues that commodities like copper, aluminum, and agricultural products have been overlooked. He highlights a “huge supply and demand imbalance” in these areas, coupled with “heightened geopolitical risk.” He believes these risks are unlikely to dissipate.

Bullish Outlook on Oil and Energy

Katz expresses a particularly bullish outlook on oil and energy-related shares. He attributes this to “gross underinvestment in energy infrastructure,” stating that the energy complex has been “left in the dust.” He positions energy as a valuable “great diversifier” for investment portfolios in 2026. He specifically points to the lack of investment in the “infrastructure and the energy complex.”

Oil Price Prediction

Regarding oil prices, Katz forecasts a minimum price of $67 per barrel for the coming year. He states, “I think 67 at a minimum is what we're looking at for the price of that commodity.” This prediction is based on the aforementioned underinvestment and anticipated demand.

Logical Connections & Synthesis

The core argument presented is that a combination of monetary policy shifts (Fed rate cuts), fiscal policy changes (tax cuts), moderating inflation, and a favorable regulatory environment will fuel significant earnings growth for S&P 500 companies, driving the index higher. Simultaneously, a shift in commodity focus, particularly towards energy, is recommended due to underinvestment and geopolitical factors, with oil prices expected to rise. The connection lies in identifying sectors poised for growth based on macroeconomic trends and supply/demand dynamics.

The main takeaway is a strong recommendation to position for growth in both the broader market (S&P 500) and the energy sector, capitalizing on anticipated economic and geopolitical shifts.