Bullish Outlook for S&P 500: Wall Street Predicts 10% Rally by End of 2025
The S&P 500 (^GSPC) has returned to within one percentage point of an all-time high, and one of Wall Street's most notorious bulls has boosted his year-end target for the benchmark index to 6,700 from a prior forecast of 6,100. BMO Capital Markets chief investment strategist Brian Belski had previously reduced his forecast amid the tariff turmoil that tanked markets in April, but now believes the market's largest tariff fears are behind investors.
In a note sent to clients on Tuesday entitled "same as it ever was," Belski detailed a more sanguine outlook for the S&P 500. "The signposts we called out in April are largely in place – markets are transitioning from 'scare me' to 'show me,'" he wrote. "We believe performance is broadening, reactions from daily rhetoric are calming, and actual corporate guidance will increase coming out of the 2Q earnings reporting period."
Belski's call for a roughly 10% rally for the S&P 500 from current levels joins a growing list of such predictions from rejuvenated bulls as the market marches back toward record highs. No fewer than 11 Wall Street firms lowered their S&P 500 targets amid the market sell-off in April, but at least eight of those have since raised their bets on where the index will end 2025.
Belski points out that economic forecasts have once again begun reverting higher, along with projections for corporate earnings this year. In fact, he argues that earnings estimates for Communication Services (XLC), Consumer Discretionary (XLY), Technology (XLK), and "especially" Financials (XLF) likely haven't recovered enough.
"The death of 'American Exceptionalism' was widely exaggerated and too vehemently applauded to hold any merit or duration in our view," Belski wrote. "After all, we continue to believe US stocks are the best global equity asset, offering the most consistent fundamentals, ingenuity, and diversification than any other market in the world."
With the shift in narrative and President Trump's various tariff pauses pushing the effective US tariff rate from a peak above 25% to about 14%, several popular trades of the early April period have unwound, including the so-called Sell America trade, which Belski believes was overdone.
The S&P 500's return to record highs is a sign of optimism among analysts and investors, with many predicting further gains in the coming months. Investors should stay informed of the latest economic news and indicators to make informed investing decisions.
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Josh Schafer is a reporter for Yahoo Finance. Follow him on Twitter at @_joshSchafer. Click here for the latest economic news and indicators to help inform your investing decisions. Read the latest financial and business news from Yahoo Finance.
