JPMorgan analysts lowered their 2026 year-end S&P 500 target to 7,200 from 7,500, warning that investors are growing complacent about the risks tied to higher oil prices.
The bank said last week that current market pricing rests on a “high-risk assumption” — that the Middle East conflict will end quickly and the Strait of Hormuz will reopen, limiting any hit to demand.
“We believe the market is pricing in a quick end to the Middle East conflict and reopening of the Strait, giving a low probability to a potential demand hit,” the analysts wrote, noting that stocks and oil tend to move more negatively in tandem after a sharp price spike.
JPMorgan added that investors have been hedging rather than fully derisking. While some speculative pockets — including software, South Korean equities, and crypto — have pulled back, broader complacency remains.
The bigger risk, the bank said, is not just inflation from higher oil prices but the potential drag on demand if the Strait remains closed.
