S&P 500 Could See Best Run of Gains Since the 1990s. This Analyst Is Bullish Again.

Stocks have powered to multiple record highs this year. More could be on the way. (Courtesy NYSE)

The S&P 500 could match its best set of annual gains in three decades this year, analysts at Oppenheimer Asset Management say, as the tailwind from trade deals and improved corporate earnings carries stocks to record highs.

Oppenheimer’s chief investment strategist, John Stoltzfus, lifted his S&P 500 price target to 7100 points on Monday, following the framework agreement on trade reached between the U.S. and the European Union over the weekend. That implies an 11% gain from current levels by the close of the year.

The move effectively reverses a price-cut target from earlier in the year, when he brought it down to 5950 points in the wake of President Donald Trump’s “Liberation Day” tariff announcement on April 2. Oppenheimer’s 7100 price target for 2025 is now the highest among the major Wall Street firms.

“With the announcement of trade deals by President Donald Trump and his administration we believe that enough ‘tariff hurdles’ have been overcome for now to reinstate our original price target for the S&P 500 of 7100 by year-end,” Stoltzfus said.

If the S&P 500 were to end the year at 7100 points, it would leave the benchmark 20.7% higher for the year. That would mark a third consecutive annual gain of 20% or more, a feat last achieved in the mid-1990s.

Stoltzfus lifted his S&P 500 earnings target to $275 a share, “which implies a forward multiple of 25.8x” to the benchmark, saying the “progress on trade negotiations removes an uncertainty that had weighed on our market outlook.”

The biggest advance in that respect occurred over the weekend, when the U.S. and the EU reached a framework agreement on trade that ended months of tense negotiations between the world’s largest economy and one of its most significant trading partners.

U.S. importers will pay a 15% tariff on EU goods, a smaller-than- expected levy that will apply to virtually every sector of commerce, including autos, over the coming weeks. The deal, reached at Trump’s golf club in Turnberry, Scotland, has been widely seen as more beneficial to U.S. growth prospects, as it allows for tariff-free access to European markets.

“An escalation of the US-EU trade tensions would have been a severe risk for the global economy…this risk seems to have been avoided” said Carsten Brzeski, global head of macro at ING.

“For the EU, the agreement is probably almost as good as it could get,” he added. “Only the fact that steel, aluminum and pharmaceuticals won’t be included shows that the EU still had to pour more water into the wine during the negotiations.”

Market focus on trade talks is now likely to switch to Sweden, where officials from the U.S. and China resume negotiations on Monday to potentially extend a truce on tariffs reached in early June beyond a mid-August deadline. Uncertainty about those talks, plus the lack of detail in agreements reached with the EU, Japan, and the United Kingdom, remains a significant market concern.

Tariff rates, meanwhile, are set to rise from around 3% last year to around 20% over the coming months, according to Goldman Sachs estimates. That would be the highest since the early 1930s.

Wall Street also faces a blockbuster week ahead with 162 S&P 500 companies reporting their financial results, a Federal Reserve rate decision, and data on jobs, inflation, and second-quarter economic growth.

Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note published Sunday that while companies are managing the tariff changes well so far, it is too soon to assume they won’t lead to inflation or create other challenges for the economy.

“On the inflation point, the main thing stuck in our head is how many companies we read (from different sectors and industries) that referred to the idea that tariff-related impacts would be felt more acutely in the back half of the year,” she said. “We think the real test for tariff impacts is [the second half of this year], and perhaps even early 2026.”

Morgan Stanley’s Mike Wilson, however, sees S&P 500 companies showing more resilience in terms of earnings and cash flow than previously expected into the first half of next year, as well.

The bank’s chief U.S. equity strategist said he’s leaning toward his “bull case” target of 7200 points for the benchmark by mid-2026, according to a report from MarketWatch, thanks in part to profit margin improvements tied to artificial intelligence technologies, a weak U.S. dollar, and lower Fed interest rates.

“Our regime analysis shows that when earnings growth is above the long-term median and the fed-funds rate is down on a year-over-year basis (our house views by mid-2026), the market multiple expands 90% of the time,” Wilson said.

Write to Martin Baccardax at martin.baccardax@barrons.com