A Big Target: We Think S&P 500 Will Reach 7,500 in 2025

A Big Target: We Think S&P 500 Will Reach 7,500 in 2025

Despite Wall Street's predictions of tame returns, 2025 is shaping up to be anything but average. Strong fundamentals, robust earnings growth, and a favorable economic environment suggest another year of significant market gains. Here’s why we believe 2025 will continue the bull market momentum:

  • Earnings Growth Acceleration: Estimated quarterly earnings growth rates for 2025 range from 12.7% to 17%, marking two consecutive years of double-digit gains.

  • Seasonal Tailwinds: December's historical 73% rate of positive returns and the potential for a record-breaking Santa Claus rally bolster bullish expectations.

  • Economic Confidence: Improved consumer sentiment, pro-business policy proposals, and potential deregulation are fueling optimism and economic activity.

  • AI Stock Boom: Parallels to the 1990s tech boom indicate we are in the early stages of an AI-driven market expansion.

  • Cash on the Sidelines: With over $1 trillion waiting to re-enter the market, the rally could gain significant momentum.

While risks like policy errors, trade wars, or geopolitical tensions remain, the "animal spirits" of the market appear to have been reignited. With strong fundamentals and renewed optimism, we believe 2025 will defy cautious sell-side predictions and deliver another year of exceptional returns.

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