Société Générale Bank: Three Factors for S&P 500 Growth by Late 2026
How falling oil prices, a weakening downward trend, and post-election certainty will impact the market in a month
The French investment bank believes that declining oil prices will support consumers and reduce pressure on inflation, interest rates, and stocks. At the same time, the low level of unemployment benefit claims, according to Société Générale, indicates sustained strong economic growth.
The bank identifies a prolonged decline in the cross-market momentum indicator as the second factor. This indicator tracks price changes across several asset classes and, analysts believe, may be approaching a reversal. The third factor is the market's historical reaction following U.S. midterm elections: in the six months after the last 20 such elections, the S&P 500 has gained an average of 12.7%.
Société Générale has set a target level for the S&P 500 at 8,000 points by the end of 2026, implying a 7% increase from current values. Under a more favorable scenario, the bank estimates the index could rise to 10,000 points, representing a 30% growth in the coming months.
To participate in the potential rally, the bank prefers the equal-weighted S&P 500 index, as well as utility stocks and shares of companies sensitive to consumer demand. Among funds with such exposure, it highlights the Invesco S&P 500 Equal Weight ETF (RSP), State Street Utilities Select Sector SPDR Fund (XLU), and Vanguard Consumer Discretionary ETF (VCR).
