The stock market has been on a tear since its October 12, 2022 bottom, with the S&P 500 and Nasdaq 100 up 70% and 101%, respectively.
A strong economy has dispelled any lingering fears of a potential recession, consumers are on solid footing , and perhaps most importantly, corporate earnings are rising to record levels.
So, after back-to-back years of more than 20% returns for the S&P 500, what's in store for 2025?
According to Wall Street, more gains, albeit not at such a fast pace.
The average 2025 year-end price target for the S&P 500 is 6,539, a potential gain of about about 8% from the benchmark index's current levels.
Here's a complete rundown of what Wall Street expects to happen in the stock market next year.
BCA Research: bearish, S&P 500 target of 4,452
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 traveler 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.
Stifel: bearish, S&P 500 target of "mid 5,000s"
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.
Goldman Sachs: bullish, S&P 500 target of 6,500
Goldman Sachs sees corporate profits jumping 11% next year, helping fuel a similar return in the broader stock market.
The driving factor behind Goldman's bullish view is a continued expansion in the US economy, with GDP growing at an annualized rate of 2.5%.
Meanwhile, corporate revenues should jump 5%, according to Goldman.
To take advantage of the potential upside next year, the bank recommends investors employ a similar strategy outlined in President-elect Donald Trump's 1987 book, The Art of the Deal.
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"Think big" by broadening out your stock market exposure beyond just the largest mega-cap tech companies.
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"Maximize your options" by owning a basket of stocks that could be swept up in a mergers and acquisitions wave.
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"Deliver the goods" by owning companies set to benefit from the implementation of AI.
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"Protect the downside" by owning sectors that aren't tied to macro economic developments.
Morgan Stanley: bullish, S&P 500 target of 6,500
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.
"A potential rise in corporate animal spirits post the election (as we saw following the 2016 election) could catalyze a more balanced earnings profile across the market in 2025," Wilson said in a note last month.
Wilson had previously been skeptical of stock market upside due to elevated valuations. 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.
JPMorgan: bullish, S&P 500 target of 6,500
JPMorgan flipped from bear to bull in its 2025 outlook, raising its year-end price target to 6,500 due to an expanding business cycle and continued earnings growth.
"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 labor 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.
Fundstrat: bullish, S&P 500 target of 6,600
Fundstrat's Tom Lee set two price targets for the S&P 500 in 2025: a mid-year target of 7,000 and a year-end target of 6,600.
According to Lee, the stock market could rise as much as 16% from current levels in the first half of the year, but a lot of that will likely be erased in the second half before a year-end recovery takes hold.
"There are strong tailwinds supportive of stocks in 2025. But we see this as a tale of 'two years,'" Lee said in his 2025 outlook note.
All-in, Lee sees the S&P 500 rising 8% in 2025, which is about in line with historical annual returns for the stock market.
The two supporting factors for the stock market next year include a Fed "put," referring to the idea that the Federal Reserve will bolster markets with more interest rate cuts, sticking to the labor side of its mandate as long as inflation remains subdued.
The other factor is the Trump "put," which speaks to the idea that President-elect Trump will implement business friendly policies like lower tax cuts, which should boost business sentiment and increase corporate profits.
Additionally, there should be a boom in mergers and acquisitions under the income Trump administration, according to Lee.
Ned Davis Research: bullish, S&P 500 target of 6,600
According to Ned Davis Research, the main pillars of the bull market are still in place, "but they may come under threat late in the year."
The research firm expects another year of gains for the stock market, but now without an increase in volatility.
"The skies appear mostly clear for the financial markets heading into 2025. The Fed's easing cycle is ongoing amid disinflation and low recession risks, earnings growth is solid, and the rally is broadening," Ned Davis Research said in its outlook note.
However, there are dangers lurking for the economy and stock market given uncertainty around the Federal Reserve's monetary policy, the potential for tariffs and deportations, and the fact that the second half of the first year of the presidential cycle sees increased risks.
"Our year-end S&P 500 target is 6600, or 9% above current levels, with the risk for the market to overshoot and give back some gains in the second half," Ned Davis Research said.
UBS: bullish, S&P 500 target of 6,600
UBS believes the path of least resistance for the stock market is up in 2025.
The firm set a 6,600 price target for the S&P 500, arguing that even with bouts of volatility and corrections, the stock market can still rise.
"Our December 2025 target of 6,600 will be fueled by solid economic growth, the Fed's easing, and AI advancement," UBS said in their outlook note earlier this month.
The firm favors technology, utilities, and financial stocks within the US market.
Bank of America: bullish, S&P 500 target of 6,666
Bank of America strategist Savita Subramanian expects corporate earnings will continue to grow in 2025, estimating that the S&P 500 will grow its earnings per share by 13% year-over-year to $275.
"In 2025, volume is the story that replaces the last two years' mega-cap Tech story. A manufacturing recovery after a 2-year hiatus should drive a pickup in sales (+6% sales growth), driving big operating leverage in beaten-down cyclical sectors," Subramanian said in her 2025 outlook note.
For the Trump 2.0 agenda, Subramanian expects a wash in terms of the inflationary impacts of certain policies.
"Immigration and tariffs may be inflationary, but corporate tax cuts are disinflationary as benefits get passed onto the consumer. Lower oil prices from increased energy production could also help," Subramanian explained.
Still, expect higher uncertainty around inflation and deficit risks going into 2025, Subramanian added.
All-in, she expects the S&P 500 to digest its two-year surge of more than 50% with more muted gains that are spread out across sectors and less concentrated in mega-cap tech stocks.
For that reason, Subramanian likes large-cap value stocks in the financials, materials, real estate, utilities, and consumer discretionary sectors.
BMO: bullish, S&P 500 target of 6,700
BMO strategist Brian Belski offered three reasons he expects the stock market to gain 11% in 2025.
For one, history is on the stock market's side as it enters the third year of its bull market.
Since 1950, a cyclical bull market in its third year returns about 6% on average.
Second, Belski believes the S&P 500 will grow corporate earnings by more than 6%, which would help balance out equity valuations by making them less expensive.
And finally, Belski argued that the stock market will react favorably to a continued easing in monetary policy.
"If you look at monetary policy and fiscal policy, that's what really drives markets, and the train has left the station with respect to monetary policy becoming more loose," Belski said.
DataTrek Research: bullish, S&P 500 target of 6,840
DataTrek Research co-founder Nicholas Colas sees the stock market delivering above-average gains next year, with a year-end S&P 500 price target of 6,840.
"The most important issue for anyone invested in the US equity market is the stability of the US economy in 2025. Simply put, one must be very sure there will not be a downturn next year. Our view is consistent with that belief. Nothing about the current economy suggests we are at a precipice," Colas said in his outlook note.
Importantly, Colas highlighted that the US labor market is strong, energy prices are low, and the Fed will likely look to keep cutting rates next year.
On top of all that, the incoming Trump administration could deliver tax cuts and a wave of deregulation. "But even without those factors the American economy is in good shape," he said.
Yardeni Research: bullish, S&P 500 target of 7,000
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.
Yardeni said "animal spirits" could be unleashed on the market, especially if there is a swift resolution to the wars between Russia and Ukraine and in the Middle East.
The combination of continued profit growth, AI advancements, and investor excitement for a second Trump administration could ultimately fuel a melt-up in the stock market similar to the late 1990s, but for now, Yardeni is sticking with his call for a 16% gain in the S&P 500 next year.
Oppenheimer: bullish, S&P 500 target of 7,100
Oppenheimer is the biggest bull on Wall Street, with a 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."
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