How did markets react to this week’s news?

U.S. equities climbed this week on strong earnings and artificial intelligence (AI) optimism – even as markets weathered renewed U.S.-China tensions and fresh Russia sanctions – while bonds ended flat to down as investors awaited today’s key inflation data and next week’s expected Federal Reserve (Fed) rate cut. That said, let’s shift focus to how this year’s J.P. Morgan Long-Term Capital Market Assumptions (LTCMAs) help translate these near-term swings into long-term portfolio outcomes.

Setting the stage for the 2026 LTCMAs

The LTCMAs are out, setting the stage for how we think about risk, return and portfolio construction for the next 10 to 15 years – not short-term market moves or headlines.

What are the LTCMAs?

Now in their 30th edition, the LTCMAs are more than just a forecast – they’re the engine behind our planning analytics and the backbone of our investment process. Built from the ground up using a transparent, data-driven “building block” approach, we break down expected returns for each asset class into core components like (GDP) growth, inflation, yields and valuations. These inputs are stress-tested across over 200 asset classes and 20 currencies, ensuring every projection is grounded in economic reality. The result? A robust, forward-looking framework that underpins over $1 trillion in long-term investment portfolios.

Why do they matter?

The LTCMAs turn insights into action. They drive expected returns and risk for every portfolio scenario, from stress-testing market downturns to mapping out a 20-year retirement plan. Investors can “pre-experience” a range of market conditions, seeing how their goals hold up in everything from bull runs to bear markets. They also help define risk buckets – liquidity, lifestyle, growth and legacy – each with its own risk profile and time horizon. They calibrate the right risk level for each bucket, ensuring projected volatility and returns match the investor’s goals. This lets investors walk through best- and worst-case scenarios, visualizing how different allocations would have performed in past crises. It’s not just about averages – it’s about building confidence by understanding trade-offs and making informed decisions.

Why are they relevant through both a short-term and long-term lens?

This year’s LTCMAs arrive at a pivotal moment, as investors grapple with a world that feels both resilient and uncertain. The headline numbers might seem like modest changes, but the underlying themes are anything but static. The shift beneath the surface is defined by a trio of forces: Economic nationalism is putting up new barriers, dragging on growth and stoking inflation; fiscal activism is back in the spotlight, with governments ramping up spending, fueling demand but also adding to price pressures; and the acceleration of technology – especially AI – is transforming business models, driving capital spending and supercharging productivity, even as it sparks volatility.

With that being said, here’s how the LTCMAs can help investors address today’s most pressing questions – and turn today’s concerns into opportunities:

Breaking down the insights from the 2026 LTCMAs

Understanding the “growth gap” between GDP and revenue trends

One of the most common questions we hear is, if U.S. GDP growth is projected to slow to 1.8%, how can equity return forecasts remain steady? The answer: revenue growth, which tracks nominal – not real – GDP, is expected to outpace the growth of the economy.

This clarification is important because investors often focus on real GDP, which is adjusted for inflation, making the gap between 1.8% real GDP growth and 6% revenue growth seem wide. While there’s still a gap between nominal GDP growth of 4.3% and revenue growth, nominal GDP provides a more accurate benchmark for revenue trends.

There are two main reasons for this:

• U.S. companies benefit from a sector mix tilted toward higher-growth, higher-margin industries like technology.
• Nearly 30% of S&P 500 revenues come from outside the U.S., tapping into faster-growing foreign demand.

Looking back at history, revenue growth has outpaced nominal GDP over 60% of the time, especially during periods of strong corporate pricing power and innovation. The result: U.S. large caps are projected to return 6.7% annually, even as valuations are expected to be a drag.

Navigating a high bar for valuations

After several years of strong performance, valuations are elevated – and expected to be a headwind for returns.

The LTCMAs model this by projecting a gradual decline in price-to-earnings ratios from current levels, which will weigh on total returns. Still, there are compelling reasons why valuations can remain higher than historical averages. In the U.S., the index composition has shifted toward higher-quality, faster-growing companies – particularly in technology and other sectors with resilient margins and strong global reach. Buybacks are projected to contribute 3% to total returns, while gross dilution is expected to be a 1.5% drag. Dividend yields are forecast to stay flat in the near term, then trend up, providing an annualized 1.7% contribution to returns. This means that while the easy gains from multiple expansion may be behind us, the evolving makeup of equity markets and the premium placed on growth and profitability suggest that elevated valuations can persist.

Rethinking diversification

The LTCMAs project that the correlation between stocks and bonds may continue to drift higher and turn positive, reflecting a world of elevated inflation and rate volatility. This doesn’t mean bonds have lost their value as diversifiers – especially when growth scares spook markets. High-quality fixed income still maintains the lowest correlation to equities among liquid assets and the return to a higher yield environment has restored its capacity to potentially deliver significant positive returns if rates decline. But in a world where stocks and bonds could move in tandem, investors might consider diversifying the diversifiers by adding assets that can help cushion portfolios when traditional relationships break down.

The bottom line

The 2026 LTCMAs are more than just a forecast – they’re a call to action. In a world where policy, technology and market dynamics are all in flux, the LTCMAs provide a disciplined, data-driven framework for making informed decisions. They help investors bridge the gap between short-term concerns and long-term opportunity, turning volatility into a source of strength rather than a risk to be avoided. As always, our team is here to help translate these insights into actionable strategies tailored to each investor’s unique goals and circumstances.

All market and economic data as of 10/24/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

DISCLOSURES

The information presented is not intended to be making value judgments on the preferred outcome of any government decision or political election.

Index definitions:

The Solactive United States 2000 Index intends to track the performance of the largest 1001 to 3000 companies from the United States stock market. Constituents are selected based on company market capitalization and weighted by free float market capitalization.

The Russell 3000 Index is a capitalization-weighted stock market index that seeks to be a benchmark of the entire U.S. stock market. It measures the performance of the largest 3,000 U.S. companies representing approximately 96% of the investable U.S. equity market.

The S&P 500 Equal Weight Index is the equal-weight version of the widely-used S&P 500. The index includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight of the index total at each quarterly rebalance.

The Bloomberg U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).

The Magnificent Seven stocks are a group of influential companies in the U.S. stock market: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla.

The Magnificent 7 Index is an equal-dollar weighted equity benchmark consisting of a fixed basket of 7 widely-traded companies (Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, Tesla) classified in the United States and representing the Communications, Consumer Discretionary and Technology sectors as defined by Bloomberg Industry Classification System (BICS).

The S&P Midcap 400 Index is a capitalization-weighted index which measures the performance of the mid-range sector of the U.S. stock market.

The S&P 500 index is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

Bonds are subject to interest rate risk, credit, call, liquidity and default risk of the issuer. Bond prices generally fall when interest rates rise.

Standard and Poor’s 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index was developed with a base level of 10 for the 1941–43 base period.

The Bloomberg Eco Surprise Index shows the degree to which economic analysts under- or over-estimate the trends in the business cycle. The surprise element is defined as the percentage difference between analyst forecasts and the published value of economic data releases. 

The MSCI World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance.

The NASDAQ 100 Index is a basket of the 100 largest, most actively traded U.S companies listed on the NASDAQ stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. These non-financial sectors include retail, biotechnology, industrial, technology, health care, and others.

The Russell 2000 Index measures small company stock market performance. The index does not include fees or expenses.

We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice.

The views, opinions, estimates and strategies expressed herein constitutes the author's judgment based on current market conditions and are subject to change without notice, and may differ from those expressed by other areas of J.P. Morgan. This information in no way constitutes J.P. Morgan Research and should not be treated as such. You should carefully consider your needs and objectives before making any decisions. For additional guidance on how this information should be applied to your situation, you should consult your advisor.

All companies referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by J.P. Morgan in this context.

JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. Information presented on these webpages is not intended to provide, and should not be relied on for tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.

RISK CONSIDERATIONS 

• Past performance is not indicative of future results. You may not invest directly in an index.
• The price of equity securities may rise or fall due to the changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Equity securities are subject to 'stock market risk' meaning that stock prices in general may decline over short or extended periods of time.
• Investing in fixed income products is subject to certain risks, including interest rate, credit, inflation, call, prepayment and reinvestment risk. Any fixed income security sold or redeemed prior to maturity may be subject to substantial gain or loss.
• In general, the bond market is volatile and bond prices rise when interest rates fall and vice versa. Longer term securities are more prone to price fluctuation than shorter term securities. Any fixed income security sold or redeemed prior to maturity may be subject to substantial gain or loss. Dependable income is subject to the credit risk of the issuer of the bond. If an issuer defaults no future income payments will be made.
• When investing in mutual funds or exchange-traded and index funds, please consider the investment objectives, risks, charges, and expenses associated with the funds before investing. You may obtain a fund’s prospectus by contacting your investment professional. The prospectus contains information, which should be carefully read before investing.
• Investors should understand the potential tax liabilities surrounding a municipal bond purchase. Certain municipal bonds are federally taxed if the holder is subject to alternative minimum tax. Capital gains, if any, are federally taxable. The investor should note that the income from tax-free municipal bond funds may be subject to state and local taxation and the alternative minimum tax (amt).
• International investments may not be suitable for all investors. International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Some overseas markets may not be as politically and economically stable as the united states and other nations. Investments in international markets can be more volatile.
• Investments in emerging markets may not be suitable for all investors. Emerging markets involve a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Some overseas markets may not be as politically and economically stable as the united states and other nations. Investments in emerging markets can be more volatile.
• Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.
• Real estate investments trusts may be subject to a high degree of market risk because of concentration in a specific industry, sector or geographical sector. Real estate investments may be subject to risks including, but not limited to, declines in the value of real estate, risks related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by borrower.
• Investment in alternative investment strategies is speculative, often involves a greater degree of risk than traditional investments including limited liquidity and limited transparency, among other factors and should only be considered by sophisticated investors with the financial capability to accept the loss of all or part of the assets devoted to such strategies.
• Structured products involve derivatives and risks that may not be suitable for all investors. The most common risks include, but are not limited to, risk of adverse or unanticipated market developments, issuer credit quality risk, risk of lack of uniform standard pricing, risk of adverse events involving any underlying reference obligations, risk of high volatility, risk of illiquidity/little to no secondary market, and conflicts of interest. Before investing in a structured product, investors should review the accompanying offering document, prospectus or prospectus supplement to understand the actual terms and key risks associated with the each individual structured product. Any payments on a structured product are subject to the credit risk of the issuer and/or guarantor. Investors may lose their entire investment, i.e., incur an unlimited loss. The risks listed above are not complete. For a more comprehensive list of the risks involved with this particular product, please speak to your J.P. Morgan team.
• As a reminder, hedge funds (or funds of hedge funds) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss. These investments can be highly illiquid, and are not required to provide periodic pricing or valuation information to investors, and may involve complex tax structures and delays in distributing important tax information. These investments are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any such fund. For complete information, please refer to the applicable offering memorandum.
• For informational purposes only -- J.P. Morgan Securities LLC does not endorse, advise on, transmit, sell or transact in any type of virtual currency. Please note: J.P. Morgan Securities LLC does not intermediate, mine, transmit, custody, store, sell, exchange, control, administer, or issue any type of virtual currency, which includes any type of digital unit used as a medium of exchange or a form of digitally stored value.
• The prices and rates of return are indicative, as they may vary over time based on market conditions.
• Additional risk considerations exist for all strategies.
• The information provided herein is not intended as a recommendation of or an offer or solicitation to purchase or sell any investment product or service.
• Opinions expressed herein may differ from the opinions expressed by other areas of J.P. Morgan. This material should not be regarded as investment research or a J.P. Morgan investment research report.