2025 Stock market projections have landed. What is your price target for markets?

US Markets in 2025.

Wall Street predictions for the markets of the world’s largest economy are out.

Before we get into the numbers, it is worth saying that stock-market predictions are frequently, and often comically, wrong.

John Galbraith once said: ‘There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know’.

In 2023, the S&P 500 closed at 4,769.83. As of the close on Friday 13^th December 2024, it was trading 6,051.09. Here are a few quotes from this time last year about what Wall Street predicted 2024 would bring:

-- "We are forecasting the S&P 500 to end 2024 at 4,257."

-- "The S&P 500 would be fairly valued in the 4,750 range by end of 2024."

-- The "S&P 500 [will] end 2024 between 4,700 and 4,800."

-- "Our year-end 2024 fair-value target range [is] 4,850 to 4,950."

-- "Our year-end target for the S&P 500 is 4,940."

If you can't get it right, get noticed. Analysts often aren't deterred by being wrong as for some, the primary goal in issuing year-ahead forecasts is to get attention. Being right is nice, but not necessary. Take the extremes with a pinch of salt, and more often look at the average.

The average 2025 year-end price target for the S&P 500 is 6,539, a potential gain of about 8% from the benchmark index's current levels.

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JP Morgan, Citi Bank, Goldman Sachs and Morgan Stanley have all gone for a steady 6,500. Close to the average, and statistically a safe bet.

However, as we pointed out in last week’s article, JP Morgan flipped from bear to bull in its 2025 outlook having got the last 2 years very very wrong. Having stated for the last two years that stocks would fall, the bank had a shake-up and parted ways with the forecaster.

"US equities should remain supported by the expanding business cycle, US Exceptionalism that is helping broaden the AI cycle and earnings growth, ongoing easing by global central banks and the wind-down of Fed's QT in 1Q," JPMorgan strategist Dubravko Lakos-Bujas said.

For Lakos-Bujas, the strength of the consumer is an important component of his bullish view of the stock market. He highlighted that US households are benefiting from a tight labour market, have record wealth of about $165 trillion, and could benefit from potentially lower energy prices going forward.

Trump's election win could also boost the stock market and economy, according to the note.

"The benefit of deregulation and a more business-friendly environment are likely underestimated along with potential for unlocking productivity gains and capital deployment," Lakos-Bujas said.

Morgan Stanley chief investment officer Mike Wilson said interest-rate cuts from the Federal Reserve, combined with improving economic growth and the potential for a wave of deregulation under the incoming Trump administration, means investors should lean bullish on stocks in 2025.

Wilson is a bear turned bull having also got it wrong for the last 2 years. He is sceptical of stock market upside due to elevated valuations, but while he admits they're still "rich," they could be justified as long as the economy holds up.

And looking under the surface, valuations aren't hitting extremes, according to the note.

"The S&P 500 median stock multiple is less extended at 19.0x and should stay supported if the earnings recovery broadens out in 2025 as we expect," Wilson said.

The Bulls

According to market veteran Ed Yardeni, the Roaring 20's will continue in 2025.

For years, Yardeni has been bullish on the stock market thanks to his belief that AI will unlock a wave of productivity, helping fuel economic growth while keeping inflation at bay.

His bullish outlook hasn't changed for 2025, with the strategist setting one of the highest targets on Wall Street at 7,000.

The incoming Trump administration is also helping Yardeni keep his bullish flare, based on the idea of imminent tax cuts.

"For the S&P 500, we are raising our 2025 and 2026 operating earnings per share from $275 to $285 and from $300 to $320. These estimates assume that Trump will quickly lower the corporate tax rate from 21% to 15%," Yardeni said in a note last month.

Oppenheimer is the biggest bull on Wall Street, with an S&P 500 year-end price target of 7,100.

Strategist John Stoltzfus is eyeing yet another year of double-digit returns for the index, driven by strong fundamentals.

"Traders and investors of bullish persuasion (of which we are part) point to fundamentals that suggest the current resilience of the economy and the stock market appear poised to continue into next year," Stoltzfus said in a recent note.

One of the big drivers for next year's projected gains is the continued development and adoption of AI technologies.

"Artificial intelligence presents in our view a watershed point on the historic timeline of technology and economic progress," Stoltzfus said, adding, "We're not suggesting paradise on earth nor are we expecting a 'Goldilocks world' but rather a genuine potential for AI to provide greater efficiencies in key areas that are challenging progress today across the sectors and society."

The Bears

According to BCA Research strategist Peter Berezin, a recession in 2025 will spark a 26% decline in the S&P 500.

Berezin expects global economic growth to slow sharply next year, in part driven by a "major global trade war" initiated by the incoming Trump administration.

"Hopes of a soft landing failed to materialize in 2025 as a trade war and a bond market riot pushed the global economy into a recession," Berezin said in his 2025 outlook note, spoken as a time traveller looking back on the year from January 2, 2026.

In his 2025 prediction, Berezin highlighted a weakening job market and a US consumer that "finally buckles."

"Going into 2025, most strategists expected US consumer spending to hold up well. They were wrong," Berezin predicted, pointing to the depletion of pandemic savings and a rise in credit card delinquencies.

According to Barry Bannister, chief equity strategist at Stifel, stock market valuations are at extremes, as is the outperformance of growth stocks relative to value stocks.

"The S&P 500 has had 4 prior P/E ratio over-valuation 'manias' above the 150Y [year] trendline — and 2024 is the 5th mania," Bannister said in the firm's outlook published on Thursday.

Bannister said the extended valuation of the S&P 500 suggests an imminent correction of 10%-15%. Such a decline would send the S&P 500 to the low-to-mid 5,000s level.

The Conclusion:

So there we have it; the Wall Street predictions for 2025 are that the S&P 500 will end somewhere between 4,450 and 7,100. We would be very surprised if this isn’t the case, but it’s hardly going out on a limb to state the obvious. The safest prediction is to estimate somewhere between 8% and 10% each year. Play the odds, and 8 times out of 10 you’ll be in the mix. Every now and then the market falls, and if it does then we don’t yet know why so it’s very hard to predict what you don’t know so will always be forgiven.

The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.

– Daniel J. Boorstin

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On our platform:

Calling the US market has been hard this year. With hindsight it is very easy to discuss how great the US markets have been, but as per above, many analysts didn't think that would be the case 12 months ago.

Our leveraged trackers have had a brilliant year (so far) on the back of that, but it's safe to say that the market climate won't always be as bullish as this year.

Like with any investment, diversification is key.

Our 'active strategies' have been the strongest performers since our formation, but this year they have struggled to keep up with our other types of strategies due to many of these projecting the US market would be more rangebound.

The best portfolios on TPP are those that spread their risk across our strategy types.

Our leveraged trackers are designed to yield 1.5 times their market benchmark. As a long-term growth tool, they are very hard to beat. If you think equities have performed well over the last couple of years, just imagine compounding those gains by 1.5 times.

The best thing about our leveraged trackers is that we offer them in two types. One is a whole market tracker (eg SP500) and one tracks structured products like the Buffett Fund.

They are a great starting point for your TPP foundations. If you can link to one of them (or multiple trackers) after a market pullback, even better. Timing the markets with these is always hard when global stocks seem so bullish, but if you're looking over a 5-10 year timeframe, it is very hard to beat these.

Combine the leveraged trackers with our 'long or flat' strategies to conclude your foundations. We find our LoF's tend to perform best in markets that oscillate, and would you believe that one of these strategies invests in the FTSE 100, but has outperformed the S&P500 this year! Our founders are big fans of these types of strategies.

Regardless of where equity markets reside, they always seem to offer an entry point for investors to link with these strategies. They're patient and they wait for high-probability trades.

Finally, although our active strategies have been the laggards this year (so far), they will come good. JP Morgan and many others struggled to time this over-exuberant market, and so did some of our active strategies.

However, what if the markets took a plunge from here? Even a retracement of 5-10%? It is safe to say that if they kept their current portfolio bias, they'd be very well positioned.

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Moving into 2025, make sure your TPP portfolio is diversified and ready to profit regardless of the climate.

Lets build a benchmark beating portfolio.

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