The S&P 500 index performed well in 2024, jumping by double digits for the second consecutive year. It surged and reached an all-time high of $6,097 as technology companies surged and the number of $1 trillion companies rose to 10. So, here are the top SPX index forecasts by top Wall Street companies like UBS, Goldman Sachs, and Morgan Stanley.
S&P 500 index forecast by Wall Street
As always happens in bull markets, most Wall Street analysts are upbeat about the stock market in 2025.
The most upbeat analysts are from Oppenheimer, who have placed their S&P 500 index target at $7,100, implying a 20% upside from the current level. If that happens, it would mean that the blue-chip index has jumped for over 20% for three consecutive years, which has rarely happened.
Wells Fargo and Deutsche Bank analysts are close by, estimating that the S&P 500 index will rise from $5,881 to $7,000 in 2025. Wells Fargo estimates that it will surge to $7,007 during the year.
The least optimistic Wall Street bank is also highly bullish on the S&P 500 in 2024. UBS expects the index to rise to $6,400, implying a mere 8.90% increase from the current level. It is followed by JPMorgan, Morgan Stanley, Goldman Sachs, and Citi, who see the index soaring to $6,500.
Barclays, Bank of America, and HSBC expect the SPX index to rise to around $6,600 during the year.
These analysts have maintained their bullish outlooks because of its recent performance and the fact that many bears have been proven wrong in the past few years.
Catalysts for the SPX index
Wall Street analysts identify several catalysts that will push the S&P 500 index much higher in the next 12 months.
First, corporate earnings have been strong in the past few years, a trend that may continue in 2025. A recent report by FactSet shows that the estimated earnings growth of firms in the S&P 500 index for the fourth quarter is 11.9%, the highest increase since Q4’21. For the calendar year 2025, analysts see the earnings growth being about 15%, with all sectors seeing growth.
Second, analysts see Donald Trump’s policies being supportive of corporate America. He has pledged to slash taxes and focus on deregulations. Most companies, especially in the financial services industry, have lamented about the state of regulations in the US. A proper deregulatory environment would lead to more earnings and dealmaking.
Third, the Federal Reserve may turn around and deliver more interest rate cuts as inflation falls. The most recent PCE inflation data showed that inflation rose at a slower rate in November. Lower oil prices could lead to good inflation figures at a time when the unemployment rate has risen to 4.2%.
Risks for the S&P 500
As I have warned, the S&P 500 index faces some potential risks. The first one is that companies are highly overvalued, with many big ones having a P/E ratio of over 30. As such, these names may have a valuation reset in 2025.
Second, there is a risk that bond vigilantes will return to the market and push yields much higher. A likely catalyst for that is if Donald Trump attempts to pass unfunded tax cuts. Such a meltdown in the bond market could resemble what happened in the UK during the Lizz Truss era a few years ago. The other risk, as I have written here, is that the S&P 500 index has formed a rising wedge chart pattern, which could lead to a big dive.
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