With Goldman Sachs and Morgan Stanley setting their 2025 target for the US S&P 500 index at 6500 points, analysts who have been slower to take action are forced to come up with more dramatic predictions and compete for market attention.
As the latest entrant, Savita Subramanian, Head of US Securities and Quantitative Strategy at Bank of America, predicts that by the end of 2025, the S&P 500 index will reach 6666 points, with an 11% room for improvement compared to the current level of 6000 points. Bankim Chadha, Chief U.S. Securities and Global Strategy Analyst at Deutsche Bank, directly pushed this round of price calls to the 7000 point range.
Bank of America raises "6666" high
Although Bank of America's target price looks more like a barrage on Bilibili, the numbers themselves still have some historical roots - during the darkest moments of the 2009 subprime mortgage crisis, the low point of the S&P 500 index was 666.79 points, so it also has the meaning of "doubling tenfold in 16 years".
(S&P 500 Index monthly chart, source: TradingView)
The strategist team led by Subramanian stated that looking ahead to 2025, the only inconvenience is change, as volatility may reappear, providing opportunities to buy the S&P 500 index at lower levels. But by the end of the year, the market closing price may still be higher than today's level.
It is worth mentioning that, against the backdrop of the market's heated discussion on Tuesday about the "Trump tariffs" and the "Benevolent" exchange, the S&P 500 index has still risen nearly 26% year to date, and there is also a chance to achieve a return rate of over 20% for the second consecutive year. In the past 100 years, similar situations have only occurred 4 times.
The Bank of America team also pointed out that compared to the index, they are more optimistic about the performance of individual stocks in 2025, especially in the financial, optional consumption, materials, real estate, utilities and other sectors. The stock selection strategy tends to focus on large cap value stocks with good cash return prospects and closely related to the US economy. Analysts also expect that by the fourth quarter of 2025, 96% of S&P 500 companies will achieve earnings per share growth, setting a new historical high.
The team also warned that the "Trump 2.0 era" may see immigration tightening and wage inflation, which will affect corporate profit margins and hinder the Federal Reserve's interest rate cuts. Despite experiencing a rebound after the election, small cap stocks that are still in a period of profit decline are still facing significant risks due to the increasing pressure of refinancing. Comparatively speaking, mid cap stocks with stronger fundamentals and lower policy risks will perform better.
Deutsche Bank: 7000 points!
With Bankim Chadha, the Chief U.S. Securities and Global Strategy Analyst at Deutsche Bank, announcing the S&P price of 7000 points next year, he has also become a leader in this round of singing and performing.
Chadha expects the S&P 500 index to achieve an 11% increase in earnings per share by 2024, reaching $253. By 2025, this number may reach $285. If global economic growth can reach the upper limit of the historical range, EPS growth rate may reach 17%, which is $295.
Regarding Trump's question, Chadha believes that he may have both positive and negative impacts on economic growth, but the order is crucial. Chadha believes that similar to his previous term, he may still focus on economic growth first.
Chadha stated that "we see various aspects of the cycle still coming in droves," including a shift from destocking to restocking, a rebound in capital expenditures outside of the technology industry, and a recovery in the manufacturing sector.
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