HSBC Raises S&P 500 Forecast Amid Strong Earnings and Modest Tariff Impact

In a recent update, HSBC announced an upward revision of its year-end forecast for the S&P 500 index, raising the target from 6,400 to 6,500. This marks the bank's second upgrade within a month, driven by stronger-than-anticipated corporate earnings in the second quarter and minimal effects from tariffs.

HSBC's revised target indicates a 1.3% potential gain from the index's last recorded close of 6,415.54. Nicole Inui, head of equity strategy for the Americas at HSBC, emphasized robust earnings momentum, particularly in the technology and financial sectors, alongside modest tariff impacts based on corporate commentary.

Other major financial entities like J.P.Morgan and Morgan Stanley have also set their sights on the index reaching 6,500 by year-end. A substantial 79.6% of the 489 companies that reported their second-quarter results outperformed analyst expectations, far surpassing historical averages.

Investor confidence remains high in Big Tech's extensive AI expenditures, with the index achieving new highs following Nvidia's earnings announcement. However, HSBC cautioned against potential tariff implications, offering a bull-case scenario of 7,000 and a bear-case of 5,700 for the S&P 500. The bank also expects a Federal Reserve rate cut in September, though predicts a less aggressive easing cycle than market expectations.

(With inputs from agencies.)