Over the past month or so, the top Wall Street analysts released their forecasts for where the S&P 500 could go this year. Of course, nothing can be predicted precisely, and the difference in forecast views highlight this fact. Yet based on the consensus view, here’s what an investor could end up with if they invested now and the predictions turn out to be correct.
Looking at the numbers
According to Bloomberg, the average forecast from the list of contributors is 6,614 points. At the moment the index stands at 5,842 points. So this would be a 13.2% rally for 2025. As a result, a £1k investment could be worth £1,132 by year-end.
Some forecasters are looking for greater gains, with others predicting much less. For example, the team at Oppenheimer are top of the tree with its view of 7,100 points! From the data I can see, the lowest target for 2025’s 6,000 points from Cantor Fitzgerald.
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It’s true that there’s a wide range of views here. But what strikes me as interesting is that all of these analysts are looking for the index to gain in value this year.
This isn’t to say the index can’t fall. There are several reasons that could cause these forecasts to be upended. For example, US inflation could materially rise. This could cause interest rate cuts to evaporate and investors to get worried about the broader economy.
Where the gains could come from
If the S&P 500 does hit the 6,614-point mark, it’ll likely be partly down to the mega-cap firms continuing to do well. The index is up 23% over the last year, helped by US shares such as Vistra (NYSE:VST).
Vistra’s a US-based energy company engaged in the production and distribution of electricity and related services. It’s a significant provider of energy, but some might look at the 333% jump in the share price over the past year and be a bit confused.
It’s true that normally energy companies of this size don’t see such large stock movements. Yet the driver for Vistra was the fact that the infrastructure is seen as a critical driver behind the energy demand of artificial intelligence (AI). The increasing need to power energy-hungry computers and processors mean that Vistra could see better financial performances in coming years.
Vistra could also help to lead the charge this year for the index and so may be worth considering. However, one risk is that some of the stock’s rally is built on speculation. AI hype could mean the stock’s in a bit of a bubble. If investors don’t see some tangible proof of demand filtering down to higher profits soon, the share price could fall.
Overall, sentiment towards the US stock market’s positive for the year ahead. Investors do need to be careful and do their own research, but the professionals are clearly expecting a good 2025.
