'Bubble may be far from bursting': Capital Economics says S&P 500 could hit 6,500 by end of next year (2024)

FAQs

What is the S&P 500 forecast for 2024? ›

Analysts expect overall S&P 500 earnings to rise 10.4% in 2024, LSEG data showed. But stocks are also at high valuation levels. The S&P 500 trades at a forward price-to-earnings ratio - a commonly used metric to value stocks - of 20.9, well above the index's historic average of 15.7, according to LSEG Datastream.

Mike Wilson, Morgan Stanley's chief U.S. equity strategist, said he sees the S&P 500 climbing to 5,400 by the second quarter of 2025.

Capital Economics chief market economist John Higgins predicts the S&P 500 can hit 6,500 by the end of 2025. This outlook is more dependent on the current AI-fueled bubble growing. For now, he maintains the bubble-like trade in the market can bring the benchmark average to 6,500 by the end of 2025.

Through Thursday, the venerable index had returned 3.7% for 2024, with dividends reinvested. The S&P 500 SPX was down only slightly for the day and had returned 11.1% for 2024. Now take a look at financial performance that can drive stocks higher over the long term. The S&P 500 is weighted by market capitalization.

We predict the S&P 500 will increase around 60-80% from its current levels by 2030. However, there is always the chance that unforeseen events could affect these numbers. There is also a small chance that all the factors we discussed above may turn out positively or negatively.

The market sees a greater than 80% chance of at least five rate cuts from current levels by the end of 2024. Investor optimism about the economic outlook has improved dramatically from a year ago, but there's still a risk that Fed policy tightening could tip the economy into a recession in 2024.

Analysts expect S&P 500 profits to jump 8% in 2024 and 14% in 2025 after subdued growth last year, data compiled by BI show.

One important thing for all investors to learn is that timing the market is impossible. And quite frankly, it's unimportant if you're investing in a high-quality S&P 500 index fund for the long term. Even if you buy at a market peak, your long-term returns should likely be excellent.

In our call of the day, a Goldman Sachs team led by its chief U.S. equity strategist, David Kostin, makes the case for the S&P 500 to hit 6,000 by the end of 2024, thanks to a relentless rise in big technology companies. The bank has twice lifted its year-end index call - its baseline forecast is 5,200.

What is the S&P 500 prediction for 2026? ›

Ed Yardeni of Yardeni Research told CNBC on Wednesday that the S&P 500 could jump 26% through 2026 to 6,500. "I think this is a long-term bull market. I got still 5,400 by year-end and that was a pretty bold call a year ago, but right now that's looking pretty conservative, and why not more?" Yardeni said.

If the S&P 500 does compound 9.2% annually over the next 10 years, it will reach 10,000 by 2033, Colas wrote Friday.

Over the past decade, you would have done even better, as the S&P 500 posted an average annual return of a whopping 12.68%. Here's how much your account balance would be now if you were invested over the past 10 years: $1,000 would grow to $3,300. $5,000 would grow to $16,498.

If you take your $100,000 and put it in an S&P 500 index fund, you could end up with over $1 million within 24 years if the index produces returns in line with its historical average. If you keep saving, you can get there even faster.

Answer and Explanation: The amount of $100,000 will grow to $432,194.24 after 30 years at a 5% annual return. The amount of $100,000 will grow to $1,006,265.69 after 30 years at an 8% annual return.

The Big Money bulls forecast that the Dow Jones Industrial Average will end 2024 at about 41,231, 9% higher than current levels. Market optimists had a mean forecast of 5461 for the S&P 500 and 17,143 for the Nasdaq Composite —up 9% and 10%, respectively, from where the indexes were trading on May 1.

Analysts expect S&P 500 profits to jump 8% in 2024 and 14% in 2025 after subdued growth last year. Robust global economic growth may offer equities enough support to resume a record-breaking rally, even if bets on Federal Reserve interest rate cuts this year are completely abandoned.

A separate Reuters poll of economists published earlier this week predicted June was the most likely month the Fed would begin cutting. Analysts expect overall S&P 500 earnings to rise 9.5% in 2024 after increasing around 4% in 2023, LSEG data showed.