Wall Street experts are increasingly optimistic about the S&P 500’s performance in 2025. After a strong run toward near-record highs, many strategists believe the index still has room to climb by about 10%.
Deutsche Bank’s chief global strategist, Bankim Chadha, recently raised his year-end S&P 500 target from 6,150 to 6,550. This upgrade follows a reduction earlier caused by concerns over tariffs under the Trump administration.
However, with the effective US tariff rate easing since April, Chadha now sees fewer risks to corporate earnings. He raised his forecast for S&P 500 earnings per share to $267 from $240, noting that tariff-related impacts have lessened significantly.
Chadha and others highlight a pattern dubbed the “TACO” trade—“Trump Always Chickens Out”—where the administration tends to back down on tariffs to calm markets. This has helped restore investor confidence, suggesting that if tariffs start to hurt earnings, further rollbacks are likely.
FundStrat’s Tom Lee also expects the S&P 500 to reach 6,600 by year-end. He points to the market’s resilience despite ongoing trade tensions and increased tariffs on steel and aluminum. Lee notes that investor sentiment has not fully recovered, and with over $7 trillion in money market funds ready to flow into stocks, the rally could continue as more investors enter the market.
Morgan Stanley’s chief investment officer, Mike Wilson, shares this bullish view, forecasting the S&P 500 to hit 6,500 in 2025. Wilson observes that analysts are beginning to raise earnings estimates again, a positive sign after earlier cuts during tariff escalations.
He also notes that trade policy uncertainty is easing, with less aggressive tariff changes and declining market volatility, which reduces recession risks and boosts confidence among companies and consumers.
Overall, Wall Street strategists are aligning around a roughly 10% gain for the S&P 500 in 2025, supported by easing trade tensions, improved earnings outlooks, and strong investor demand.
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