Wall Street Expects Good Times to Continue for the S&P 500 This Year
Forex - Wall Street, following two years of significant gains, expects good times for the markets to continue in 2024 as well. After rising 24% in 2023, the S&P 500 is projected to close 2024 with an approximately 23% annual gain, marking the first time since 1997 and 1998 that the index has recorded back-to-back gains exceeding 20%. However, Wall Street is skeptical about achieving another year of over 20% gains.
Predictions reviewed reveal that most strategists expect double-digit percentage growth for the S&P 500 in 2025, albeit more moderate than in 2024. According to FactSet, analysts anticipate a 14.8% increase for the S&P 500 in 2025.
US stocks surged last year due to strong economic growth, cooling inflation, a series of Federal Reserve rate cuts, and the elevated investor optimism following Donald Trump's election victory. Technology and artificial intelligence stocks were the stars of 2024 and are expected to lead significant growth in 2025 as well.
Nevertheless, Wall Street analysts are cautioning about potential headwinds in 2025. According to Bank of America, uncertainties surrounding the tariff policy proposed by Trump, potentially resurging inflation, and emerging geopolitical tensions are among the issues that could hinder stock market growth.
Fidelity Investments' global macro director Jurrien Timmer noted in a report dated December 18 that, "I am bullish on stocks for 2025, but due to high valuations and the maturation of the bull market, I don’t think investors should expect returns next year as spectacular as those seen last year."
Predictions from major banks, including UBS, Goldman Sachs, and Bank of America, vary between 10% to 14% for the S&P 500 in 2025—certainly healthy gains by any standard. Among the more optimistic analysts, Christopher Harvey, head of equity strategy at Wells Fargo (NYSE:WFC), expects the S&P 500 to reach 7,007 by the end of 2025, representing a gain of around 19%. Wall Street expects the continuation of stock gains due to strong economic growth, corporate earnings, and a business-friendly administration under Trump.
As 2025 approaches, some analysts view the impressive growth of US stocks as evidence of a new era in technology and artificial intelligence, supported by sustainable valuations and ongoing rallies, backed by strong future earnings growth.
Dan Ives, a tech bull and senior analyst at Wedbush Securities, stated in a note dated December 30 that he expects technology stocks to rise by 25% in 2025 due to reduced regulation and an ongoing "Goldilocks scenario" for Big Tech and Tesla under the Trump administration.