Baking in a Two-Speed Economy & EPS Backdrop into Our S&P 500 Forecast

The big things you need to know:

• First, we have lifted our 12-month-forward S&P 500 price target to 7,900, which represents a 7.7% gain from the May 7th close. In adjusting our forecast, we are focusing on our valuation/EPS model, which does the best job of baking in a two-speed economy and earnings backdrop.
• Second, on bigger-picture positioning, we continue to prefer Growth over Value, US over non-US, and like Small Caps (but not as much as Large Cap Growth).
• Our sector views are mostly unchanged, but we have lowered Health Care to market weight from overweight. Third, we run through the strong stats from 1Q26 reporting season.