'Bubble may be far from bursting': Capital Economics says S&P 500 could hit 6,500 by end of next year (2024)

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'Bubble may be far from bursting': Capital Economics says S&P 500 could hit 6,500 by end of next year? ›

The London-based research firm forecasted that the S & P 500 could close this year at 5,500 — slightly above consensus — before charging ahead to hit 6,500 by the end of 2025, citing the valuation trajectory during the dot-com bubble in the late 1990s. .SPX 1Y line “The bubble in the S & P 500 that is forming now ...

Capital Economics chief market economist John Higgins predicts the S&P 500 can hit 6,500 by the end of 2025. This outlook is more dependent on the current AI-fueled bubble growing. For now, he maintains the bubble-like trade in the market can bring the benchmark average to 6,500 by the end of 2025.

The S&P 500 just flashed a bullish signal that suggests a 19% gain by August 2025, according to Bank of America. The bank highlighted the stock market's 12 consecutive months of positive year-over-year gains. The signal suggests that equities still have a bullish backdrop despite weakness in April.

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

Ed Yardeni, the renowned economist and market expert, has made a bold prediction for the future of the stock market. He believes that the S&P 500 could surge by a whopping 26% by 2026 to 6,500.

In our call of the day, a Goldman Sachs team led by its chief U.S. equity strategist, David Kostin, makes the case for the S&P 500 to hit 6,000 by the end of 2024, thanks to a relentless rise in big technology companies. The bank has twice lifted its year-end index call - its baseline forecast is 5,200.

The S&P 500 could approach or exceed the 10,000 level by the early to mid-2030s. Many investors take it as a given that—since returns on the S&P 500 have been strong for 10-plus years—stocks are expensive and over-owned.

Returns in the S&P 500 over the coming decade are more likely to be in the 3%-6% range, as multiples and margins are unlikely to expand, leaving sales growth, buybacks, and dividends as the main drivers of appreciation.

We predict the S&P 500 will increase around 60-80% from its current levels by 2030. However, there is always the chance that unforeseen events could affect these numbers.

What stock will boom in 2024? ›

BCA Research: A recession in early 2025 will cause 30% stock market decline. BCA strategist Roukaya Ibrahim warned that a 30% correction in the stock market could be sparked by a recession early next year.

Anthony Denier, CEO of the trading platform Webull, says he believes the stock market will ultimately post a positive return in 2024 as investors anticipate interest rate cuts by the Fed. However, he adds, we probably won't see as big of a rally as we did in 2023.

"While we maintain a positive view on the U.S. stock market in 2024, there are a range of risk factors that could derail the current bull market," Dilley says.

U.S. stock returns: 2023 optimism carries forward

This heightened optimism is on par with the positive outlook in December 2021, when investors anticipated a 6% stock market return for 2022. Investor expectations for stock returns over the long run (defined as the next 10 years) rose slightly to 7.2%.

S&P 500 5 Year Return is at 70.94%, compared to 85.38% last month and 57.45% last year.

S&P 500 could reach 6,000 this year if Big Tech keeps impressing, says Goldman Sachs. Goldman Sachs has laid out some best/worst-case scenarios for the S&P 500 this year, one of which sees the index rising 15% from here.

The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31^st 2023, had an annual compounded rate of return of 15.2%, including reinvestment of dividends.

The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation. Investors can expect to lose purchasing power of 2% to 3% every year due to inflation.