US wealth managers give their takes on Wall Street's S&P forecasts for the coming year
Wall Street is predicting another bull run in 2025, so all you bearish advisors better get out of the way.
Or maybe not!
Oppenheimer Asset Management chief investment strategist John Stoltzfus posted his positive prediction today that the S&P 500 will hit 7100 in the new year, up almost 17 percent from Friday’s close near 6100, thanks to a resilient AI-driven economy.
Stoltzfus’ forecast made Oppenheimer the most bullish investment house on Wall Street, ahead of Yardeni Research's and Deutsche Bank’s estimates of 7,000. The strategist spent all of 2024 as a steadfast bull, repeatedly lifting his S&P 500 target from 5,200 in November 2023 to 6,200 last month.
“The broadening of the market from the market lows on Oct. 27, 2023 along with ongoing rebalancing and rotation among sectors, market capitalizations (large, mid, and small stocks), style (growth and value) and cyclicals and defensives suggest to us that the current bull market likely has legs strong enough to climb the proverbial ‘wall of worry’ into and through 2025,” Stoltzfus said in a note.
The S&P 500 is up 28 percent year-to-date in 2024, following last year’s total return of 26 percent.
Elsewhere, Goldman Sachs and rival Morgan Stanley are both on record with predictions that the S&P will end next year at 6,500. Last year, Goldman and Morgan posted end of 2024 S&P 500 estimates of 4,700 and 4,500, respectively. Citigroup is also predicting a 6,500 finish for the end of next year.
Bank of America set a 6,666 target, just slightly behind BMO Capital Markets estimate of 6,700 and ahead of UBS Global Wealth Management’s call for 6,600.
So with Wall Street’s bigwigs putting all these big numbers on the board for 2025, how should financial advisors react to this overwhelming bullishness?
Michael Leverty, CEO of Leverty Financial Group, said he doesn’t focus on specific targets in client discussions. Instead, he prioritizes long-term allocations tailored to each client’s retirement plan.
“While index targets can offer a snapshot of market sentiment, they are inherently speculative and not a reliable foundation for individual retirement strategies,” Leverty said.
And while Wall Street’s optimism for 2025 is “encouraging,” his investment philosophy is grounded in disciplined, long-term planning rather than reacting to broad market sentiment, he said. Even so, he remains “cautiously optimistic about the market’s potential for growth.”
Similarly, Tim Bartlett, senior portfolio manager of Unique Wealth, does not use index targets, saying they historically have not been accurate, and “not even the best Wall Street strategists have a crystal ball.”
In terms of his own market outlook, he says he is “a little bullish.”
Meanwhile, the S&P 500 targets are “wildly inaccurate,” as “most of Wall Street gets it wrong,” said Omar Qureshi, managing partner and investment strategist at Hightower Wealth Advisors.
He does think the markets will have a more modest year with more volatility, owing in large part to the uncertainty of policy decisions lead by President-elect Donald Trump.
“If what was promised on the campaign trail comes to pass, we will have chaos,” Qureshi said. “If, however, policy decisions are moderated, it could be helpful and reinforce an already decent economy.”
Investors should also keep in mind elevated forward price/earnings ratios driven by mega-cap companies, he said. If those companies fail to deliver sufficient earnings growth, the markets could lose a major driver of returns, he said.
Also in this camp is Tim Holland, chief investment officer at Orion, who does not establish price targets on major or minor indices, nor does he use price targets from third parties. Still, he says he does lean on “best-in-class Wall Street research as it concerns market and economic cycles” so he does not ignore their research entirely.
“What we attempt to do is determine where we think markets are headed over the intermediate term and position portfolios accordingly,” Holland said. “As it concerns our outlook for US equities, while we recognize that US stocks are expensive relative to their recent history and more and more folks seem optimistic on the US market, we think the optimism is well placed.”
On the flip side, however, Jim Thorne, chief market strategist of Wellington-Altus, has no problem with target-setting and even set his own of 7,000 for the S&P 500 by 2025, with a stretch target of 7,500 to be achieved by February 2026. Thorne said his bullish stance is reinforced by the anticipation of a global reflation trade, potential tax cuts, deregulation, and a pro-innovation environment following the Trump victory. Furthermore, he projects interest rates “to bottom out in late 2026, adding another dimension to the market dynamics.”
And while Wall Street’s sentiment for 2025 is overwhelmingly positive with forecasts ranging from 6,400 to 7,100, Thorne said his even more bullish targets do not make him feel uncomfortable in the least.
“Sometimes riding the wave of consensus expectations is the right strategy to follow,” he said.
