S&P 500 Returns Have Been Projected to Slow

Strategists anticipate annual returns could fall below 5% as Treasury yields hit levels not seen in two decades.

Updated on Oct. 8, 2026 in Investing

Bold flat-color editorial illustration of polished brass and steel structural pillars, representing systemic stability in economic market forecasting. — Strategists at Bank of America project S&P 500 annual returns may drop below 5% over the next decade as 10-year Treasury yields remain elevated. AI Illustration. Upload story photo >

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Savita Subramanian has projected that annual S&P 500 returns may drop below 5% over the next decade. This forecast follows a surge in U.S. 10-year Treasury yields, which reached a 24-year high of 5.364% on October 7, 2026.

Why it matters

High investor sentiment and risks of slowing corporate earnings growth are driving more conservative expectations for future market performance. Additionally, potential bottlenecks in AI infrastructure are expected to pressure profit margins.

The U.S. 10-year Treasury yield hit 5.364% on October 7, 2026, marking a 24-year high, while the 30-year yield reached 5.708%. Yields have gained nearly 27% during 2026.

The players

Savita Subramanian

She is a market strategist who evaluates equity outlooks using institutional valuation frameworks.

The details

While the S&P 500 faces lower long-term projections, analysts still expect the index to post its strongest earnings growth in four decades over the next five years. During 2026, the Invesco QQQ Trust rose by 24%, the SPDR S&P 500 ETF grew by 15%, and the SPDR Dow Jones Industrial Average ETF Trust increased by 7.5%.

Early 2002 marked the previous high for the 10-year Treasury yield.
During 2026, major equity indexes and Treasury yields recorded significant gains.
On October 7, 2026, the 10-year Treasury yield hit its multi-year high.
Earnings growth for the S&P 500 is projected over the next 5 years.
Returns for the S&P 500 are forecasted over the next 10 years.

Market Dynamics

This projection represents a shift from historical performance benchmarks as interest rates remain elevated. The forecast reflects broader macroeconomic cycles where higher bond yields increasingly compete with equity markets for capital allocation.

Investors may need to adjust their portfolio allocations as Treasury bonds offer higher yields compared to recent years. These projections suggest that long-term savings strategies tied exclusively to index growth may face lower returns than historical norms.

The takeaway

Investors should consider the impact of rising bond yields on their long-term equity growth expectations. Balancing portfolios with fixed-income assets may become more relevant if stock market returns moderate as projected.