The S&P 500 is anticipated to reach a level of 7,100 by the end of 2025, indicating a potential upside of approximately 17% from Friday's historic close, as reported by Oppenheimer Asset Management on Monday. Closing at an all-time high of 6,090.3 on Friday, the benchmark equity index experienced a slight decline of 0.5% during Monday afternoon trading, settling at 6,062.9.
Oppenheimer projects that the S&P 500 will conclude 2024 at 6,200, with expected earnings per share (EPS) for the index at $275 for the upcoming year, a rise from the estimated $250 for 2024. The ambitious target for the S&P 500 by the end of 2025 considers various elements such as prevailing monetary policies and the persistent strength seen in economic growth, consumer confidence, and job creation over recent years, including the performance anticipated in 2024. "Beyond fundamentals that suggest to us further upside for equities from current levels, there is increased private investor appetite across demographic groups for equities," stated John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management, in a note addressed to clients. Indicators such as a broadening market recovery from the lows of late October 2023 suggest that the current bull market likely possesses enough momentum to navigate through the 'wall of worry' leading into 2025.
Oppenheimer also notes that all 11 sectors within the S&P 500 have the potential to benefit from improved productivity linked to the rising adoption of artificial intelligence. "We're not suggesting paradise on Earth nor are we expecting a 'Goldilocks world' but rather a genuine potential for AI to provide greater efficiencies in key areas that are challenging progress today across the sectors and society," Stoltzfus added. Furthermore, last month, Wells Fargo Investment Institute revised its outlook for the S&P 500 to between 6,500 and 6,700 by the end of 2025, an increase from a previous range of 6,200 to 6,400.
They adjusted their EPS projection to $275 from an earlier expectation of $270. As of Monday, 496 S&P 500 companies have disclosed their latest quarterly financial results in the current earnings season, revealing an increase in earnings by 8.2% year over year alongside 5.1% revenue growth, showcasing robust performance overall.
Of the sectors, eight reported positive growth in profits, with five achieving double-digit increases, led by a notable 22% increase in communication services. However, energy sector earnings have notably declined by 24%, as per the report..