The last few years have been exceptional for the S&P 500. Index investors have earned a 75% total return since the start of 2023, translating into an average annualised gain of 20.5% — double the long-term historical average. And even after some stumbles in 2025 in the face of changing trade policy, US stocks continue to march higher by double-digits.
With these performance figures in mind, anyone who invested £20,000 into an S&P 500 index fund roughly two and a half years ago is now sitting pretty on £35,000.
But given the shifting economic landscape in the US, can this momentum continue? And if so, how much higher could America’s flagship index climb?
Investigating forecasts
Based on the current macroeconomic landscape, the Economy Forecast Agency has projected that the S&P 500 could reach anywhere between 11,874 and 13,662 points by the end of September 2029. Compared to where it stands today, that’s a potential four-year return of 84%-111% before counting dividends.
Needless to say, it’s a pretty bullish forecast that could transform a £20,000 investment today into anywhere between £36,800-£42,200. Digging deeper, there are a variety of factors at play.
Even with economic and trade disruptions, corporate earnings have continued to remain relatively strong in the first half of 2025. At the same time, a more dovish tone has emerged from the Federal Reserve, hinting towards more interest rate cuts this year to spark more economic growth. And with further productivity gains expected to emerge from artificial intelligence (AI) investments, being bullish for the longer term doesn’t seem unreasonable.
However, as with all forecasts, nothing’s for certain. And this particular projection is definitely more optimistic compared to the 7,300-point target from Goldman Sachs, or up to 8,000 from JP Morgan. In terms of money, that’s the equivalent of £22,580-£24,745.
There’s concern that the ongoing uncertainty surrounding tariff trade policies could cause an economic slowdown. And if inflation continues to persist, further interest rate cuts could prove elusive, hampering the upward trajectory of the S&P 500.
The power of stock picking
Just because the index as a whole may disappoint, that doesn’t mean individual constituent stocks will follow in its footsteps. And by carefully picking potential winners, investor portfolios could still achieve robust gains even while the S&P 500 slumps.
A prime historical example of this is Walmart (NYSE:WMT). Regardless of economic conditions, demand for groceries is always resilient. After all, people still need to eat. And being a discount retailer, Walmart has the added advantage of attracting shoppers looking for bargains.
In 2025, the company continues to exhibit desirable defensive traits. Management’s optimising its supply chain with AI and automation, its e-commerce channel’s growing rapidly, and its discounting strategy has continued to steal market share from competitors this year. Pairing all this with its strong financial position and Walmart seems to be well-positioned to continue its current upward trajectory.
Of course, there are still risks to consider. Discounting takes a toll on profit margins, especially when inflation and tariffs are driving up costs. This impact is only compounded by competitive pressure from rivals like Amazon within the general merchandise categories.
Nevertheless, the group’s impressive track record makes it a risk worth considering, in my opinion.
