Firm’s survey suggests above-consensus US growth and a strong year-end for leading equities index.
The S&P 500 could end 2026 as high as 7,800, according to a new survey of investment professionals.
The bi-annual survey points to accelerating US economic growth, a Federal Reserve on hold and a year-end S&P 500 target of 7,400–7,800 a reading that would outpace even the most optimistic Wall Street forecasts.
The Franklin Templeton Global Investment Management Survey, published in August 2026 and based on responses gathered through May 2026, canvassed roughly 200 portfolio managers, directors of research and chief investment officers across equity, fixed income, private debt, real estate, digital assets, hedge funds and secondary private markets.
The Franklin Templeton Institute, led by Stephen Dover, CFA, Chief Market Strategist, identified median responses across the group to develop its aggregate outlook.
Growth running hotter than the Fed expects
The survey’s US real GDP forecast of 2.5% for 2026 tops the Federal Reserve’s own June 2026 projection of 2.2%, the International Monetary Fund‘s estimate of 2.3% and the Bloomberg consensus of 2.1%, according to the report.
Franklin Templeton’s investment teams are equally upbeat on Europe, where they project real GDP of 1.5%, well above the IMF’s 0.9% expectation and the 0.6% Bloomberg consensus. On China, the firm’s median forecast of 4.5% is modestly below the 4.6% projected by both the IMF and Bloomberg.
Inflation, as measured by core personal consumption expenditures (PCE), is expected to finish 2026 in a range of 3.0%–3.5%, a level the survey notes is in line with the current reading of 3.3%, the Bloomberg consensus and the Fed’s own estimate, but still above the Fed’s 2% long-run target.
The survey projects US unemployment will close the year at approximately 4.5%, higher than the current Bloomberg consensus expectation of 4.3%. The US dollar is expected to remain essentially unchanged from current levels by year-end.
Franklin Templeton does not forecast a US recession in 2026.
Equities: broad exposure, a contrarian earnings view
The survey’s S&P 500 year-end price target of 7,400–7,800 is paired with an earnings growth forecast of more than 15%, a markedly more conservative number than the 29.7% FactSet consensus estimate.
The firm’s 2026 earnings-per-share estimate of $316 compares with the FactSet consensus of $356, while 2027 estimates are $358 and $404 respectively.
Franklin Templeton’s investment teams favor broad US stock exposure spanning large-, mid- and small-cap names, and believe both growth and value styles will generate positive returns.
At the sector level, the survey identifies technology, industrials and energy as the most likely outperformers. On a factor basis, the teams favor free cash flow yield, return on invested capital and return on equity.
Beyond US borders, the survey expresses a bullish view on emerging markets and Japan. The primary risks cited are geopolitics, Federal Reserve policy missteps and earnings coming in below expectations.
Fixed income: the Fed stays put, spreads widen modestly
With the Fed’s new leadership settling in amid stubborn inflation and a tight labor market, the survey expects the central bank to remain on hold for most of the second half of 2026.
The forecast places the Fed funds rate at 3.50% by December 2026, below the market-implied year-end rate of 4.00% and the 3.75% midpoint of FOMC members’ projections as of July 31, 2026.
US investment-grade spreads are projected to widen modestly from 78 basis points to 85 basis points by year-end, still well inside the 10-year average of approximately 111 basis points.
US high-yield spreads are expected to end 2026 at 325 basis points, up from a current level of 279 basis points, versus a 10-year average of roughly 374 basis points. High-yield default rates currently sit near 2.8% and are forecast to decline slightly to 2.5%, below their historical average of 3.2%.
Emerging market debt spreads are projected to widen from a current level of 167 basis points to 225 basis points by year-end, compared with a 10-year average of approximately 291 basis points.
Municipal bonds are identified as a high-quality, diversifying investment option.
The survey projects total returns of approximately 3.75% for the asset class in 2026, supported by solid fundamentals and elevated supply levels that the report says continue to be met with strong demand. Thirty-year conforming fixed-rate mortgages are expected to fall from 6.7% to roughly 6.25% by the end of the year.
The survey also forecasts the 10-year US Treasury yield ending 2026 at 4.25%–4.50%, based on Franklin Templeton’s median projection, compared with a market-implied year-end rate of 4.85% as of July 31, 2026. The 2-year yield is forecast to finish the year at approximately 4.25%, down from its current level of 4.28%.
Private markets: secondaries, infrastructure and credit in focus
On private markets, the survey is particularly constructive on private equity secondaries, citing attractive fundamentals and what it describes as built-in structural advantages.
Institutions are expected to continue seeking liquidity given that distributions remain well below historical levels. Secondaries managers, the report notes, are buying seasoned assets, shortening the J-curve and returning capital faster, while also offering diversification across vintage, general partner, geography, industry and stage.
Real estate valuations are described as having fallen from 2021 peaks, often to levels below replacement costs.
The office sector remains troubled, but the survey identifies opportunities in multi-family, industrial manufacturing, senior living and necessity retail. Longer-term themes cited include innovation, demographics, housing, shifting globalization and resiliency.
Infrastructure is characterized as an emerging opportunity, with the most attractive areas identified as digital infrastructure, decarbonization, deglobalization and demographics — rather than traditional assets such as roads and bridges.
On private credit, the survey pushes back against systemic-risk concerns. Franklin Templeton’s teams say they have been tracking default rates and analyzing market conditions, and identify middle-market direct lending, asset-based finance and commercial real estate debt as attractive pockets.
The report notes that a large “wall of debt” in commercial real estate will require refinancing in coming years, with private credit managers positioned to step in as banks pull back.
The survey emphasizes that diversification and manager selection remain essential in the current environment, and that investors should prioritize partners with both readily deployable capital and a proven track record across market cycles.