Anticipated S&P 500 Performance in the Second Half of 2025: A Look at Wall Street's Predictions
The S&P 500 is currently trading at new all-time highs, and a recent rally has been attributed to easing trade tensions and reduced geopolitical uncertainty. However, analysts remain divided on where the index will finish the year, with predictions ranging from 6,000 to 7,000 points, implying returns from about 8% to 18% over current levels.
Kristy Akullian, head of iShares investment strategy for the Americas at BlackRock, cautioned that forecasts tend to skew conservative. She also noted that bearish takes often get more attention than bullish ones, which can distort the perceived consensus.
One of the key drivers for the S&P 500's growth is earnings. Projections for the index’s earnings per share are rising, with BCA Research expecting earnings to reach around $249 per share by the end of 2024, representing solid growth of about 19%.
However, risks remain. Peter Berezin of BCA Research predicts a sharp correction for the S&P 500, comparing the market's current state to Wile E. Coyote hanging mid-air over a cliff. His concerns include deteriorating fundamentals, stretched valuations, weakening market breadth, rising debt levels, and strained consumers.
Other analysts, such as Eric Teal, chief investment officer at Comerica Bank, project the S&P 500 will finish the year near 6,400. Deutsche Bank, on the other hand, raised its year-end target for the S&P 500 to 6,550, and also raised its S&P 500 earnings-per-share estimate to $267 from $240.
Goldman Sachs and J.P. Morgan signal a stable rate environment and sustainable earnings-driven market rise, targeting approximately 6,000 on the S&P by year-end. The AI-driven rally is a factor in the current market momentum, according to some analysts.
In May, other major Wall Street firms, including Goldman Sachs, also revised their forecasts higher. Despite the optimism, analysts remain cautious, with ongoing trade risks a concern for some.
In summary, the fundamental outlook remains favorable, with profit margin improvements, technological innovation, and easing inflation pressures underpinning Wall Street optimism. However, analysts warn of potential earnings disappointments due to trade policy shifts, inflation persistence, or macroeconomic shocks, and some technical indicators warn of corrections despite bullish trends.
Kristy Akullian, while acknowledging analyst predictions ranging from 6,000 to 7,000 points for the S&P 500's year-end finish, encourages caution since forecasts can be overly conservative and bearish predictions often receive more attention.
In the face of projected earnings growth for the S&P 500, with BCA Research expecting earnings to reach around $249 per share by the end of 2024, some analysts remain concerned about factors such as deteriorating fundamentals, stretched valuations, and weakening market breadth, as pointed out by Peter Berezin.
