In an unusual development, every major bank and brokerage on Wall Street – from Bank of America (BAC) to Morgan Stanley (MS) – expects the benchmark S&P 500 stock index to rise in 2025.
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According to tabulations compiled by MarketWatch, not a single Wall Street firm is forecasting that the stock market will decline in the coming year. The median Wall Street target is for the benchmark S&P 500 index to rise to 6,600 in 2025, which is 9% above current levels.
Analysts at Mizuho Securities (MFG) say the consensus view would put the price-to-earnings (P/E) ratio, or valuation, of U.S. stocks in the 23 to 24 times range that is considered expensive but not excessive by historic comparisons.
Too Cautious?
Other analysts on Wall Street say the bullish calls for stocks in 2025 might be too cautious given that corporate earnings are expected to rise steadily over the coming year. Analysts, economists, and traders on Wall Street see a combination of declining interest rates, a strong U.S. economy, and healthy corporate earnings driving stocks higher in coming months.
While there is some risk that the tax cuts and tariffs planned by president-elect Donald Trump could spark a rise in inflation, Wall Street is becoming less concerned with that scenario. Analysts say that the consensus view on Wall Street has become that everything Trump says is bluster meant to strengthen his bargaining position, and that most firms do not take his threats seriously.
The S&P 500 index is up 27% so far in 2024 and near an all-time high.
Is the SPDR S&P 500 ETF Trust a Buy?
The SPDR S&P 500 exchange-traded fund (SPY) that tracks the S&P 500 index has a consensus Moderate Buy rating among 504 Wall Street analysts. That rating is based on 397 Buy, 100 Hold, and seven Sell recommendations issued in the last three months. The average SPY ETF price target of $660.04 implies 9.04% upside from current levels.
