The stock market has seen impressive gains in recent years, with the S&P 500 rising 23% in 2024 and 24% in 2023. Many investors are optimistic about the market’s performance in 2025, but analysts predict more modest growth compared to the past two years. Wall Street firms have shared their forecasts for the S&P 500 in 2025, with most expecting solid growth.
RBC Capital Markets and UBS both set a price target of 6,600, indicating an upside potential of around 11.5%. Bank of America predicts an increase to 6,666, while BMO Capital Markets expects the index to reach 6,700, a gain of 13.2%. Some analysts offer more extreme outlooks.
Goldman Sachs, J.P. Morgan, and Morgan Stanley predict around a 10% rise, with the S&P 500 reaching 6,500. Deutsche Bank’s Binky Chadha forecasts an 18% jump to 7,000, driven by sustained U.S. economic growth and low unemployment. Oppenheimer is the most optimistic, predicting a 20% increase to 7,100.
Despite the generally positive outlook, analysts advise caution.
Wall Street forecasts for S&P 500
UBS’s Mark Haefele highlighted risks such as trade issues, fiscal deficits, and geopolitical strife that could lead to higher inflation and market volatility.
RBC Capital Markets also considered downside risks, with Lori Calvasina noting that in a worst-case scenario, the S&P 500 could end 2025 at 5,775, a decline of nearly 2.5%. The S&P 500 now has a price-to-earnings ratio of around 28, a level it’s only reached a few times in the last 40 years. Each peak preceded a bear market.
If AI underperforms, a correction akin to the late 1990s could ensue. However, the timing of such a pullback is uncertain, hence selling now could result in lost money long-term. Some investors are looking to diversify, particularly by exploring high-yield alternatives like corporate bonds.
The PGIM Global High Yield Fund (GHY), yielding 10.1% and paying monthly dividends, is particularly attractive. GHY’s consistent 10.1% yield, diversification, and strong five-year performance history make it an appealing alternative to stocks. While Wall Street generally predicts continued growth for the S&P 500 in 2025, the range of outcomes and potential risks suggest that investors should remain cautious.
Regardless of short-term fluctuations, long-term investors may find opportunities for future gains.
