Deutsche Bank sees the bull market continuing due to resilient risk appetite, with the S&P 500 hitting 7,000 in 2025, CNBC reports.
This would translate to an additional 17% gain for the S&P 500 next year, which has returned 25.5% so far in 2024.
Deutsche Bank analysts are bullish on robust investor demand, strong corporate market activities, and potential tax cuts and deregulation under the Trump administration.
Binky Chadha, chief global strategist, wrote in a client note, “We see robust equity (and bond) inflows continuing, boosted by strong risk appetite. We see S&P 500 buybacks rising from an annual run rate of $1.1 trillion currently to about $1.3 trillion next year, rising in line with earnings.
“We see the demand-supply backdrop for U.S. equities remaining solid even with conservative assumptions, pushing the S&P 500 to around 7,000 next year,” Chadha continued.
However, the German bank cautioned, Trump’s tariff and immigration policies could derail this thesis.
“The main downside risks are more likely to emerge if greater weight is put on aggressive trade and immigration policies,” Deutsche Bank said. “This could be more negative for growth and push up inflation. That would lead the Fed to cease the [interest rate] cutting cycle and possibly even contemplate restarting rate increases, which would likely put upward pressure on bond yields.”
Other investment banks have put out rosy outlooks following President-elect Donald Trump’s victory. UBS said a “Roaring 20s” period for stocks could continue, and both Goldman Sachs and Morgan Stanley last month forecast the S&P 500 index would reach 6,500 by the end of 2025, on the back of continued growth in the U.S. economy and corporate earnings.
Likewise, the median forecast of 48 equity strategists, analysts, brokers, and portfolio managers polled by Reuters puts the benchmark S&P 500 at the close of 2025 at 6,500 points.