The S&P 500 Outlook For 2025

The other major indices also roared. The Nasdaq soared 29%, while the Dow Jones gained a modest 13%, marking a strong year for U.S. equity markets.

Surging AI stocks, a resilient economy, the “Trump 2.0” post-election rally, and rate cuts drove the rally.

source: carbonfinance

The AI powerhouse was a key driver of the S&P 500’s stellar year, contributing 22% of the index’s performance.
Other Magnificent 7 members—Apple, Amazon, and Meta—collectively added another 19% to the total gains.

While Nvidia and Tesla have dominated the internet buzz—and rightfully so—the true standout of last year might come as a surprise. Palantir (PLTR) emerged as the big winner, boasting a remarkable gain of over 300%.

source: real investment advice

As is often the case, investors tend to chase last year’s best performers only to find out that what worked last year may have a quite different outcome this year.

2025 Outlook

No one has a crystal ball.

Wall Street targets range from 6,400 to 7,007.

This implies returns between +8% and +18% from Wednesday’s close.

Analysts project the S&P 500’s earnings to climb to $249 per share by the end of 2024, up from $208 per share—a robust 19% growth. Profit margins are expected to improve, driven by strategic workforce adjustments, shifts in work-from-home policies, and technological advancements.

Lower inflation is expected to ease cost pressures, though this could shift depending on changes in trade policy.

However, a significant event reducing earnings expectations could disrupt this outlook. As history shows, there is a strong correlation between corporate earnings and equity market performance.

source: real investment advice

Overall, the fundamentals driving earnings growth remain solid. While valuations are above historical averages, they aren’t a significant cause for concern. As always, uncertainty persists, but the outlook for stocks appears favourable.

Investors can long the S&P 500 using our 5x S&P 500.

Alternatively, investors can short the S&P 500 using our -5x S&P 500.

Investors can long Palantir using our 3x Palantir.

Alternatively, investors can short Palantir using our -1x Palantir.

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