Will the Stock Market Crash or Soar? Wall Street’s 2025 Forecast
After a volatile start to 2025, the S&P 500 has rebounded, but uncertainty remains high. Wall Street now predicts the market will likely stay flat for the rest of the year, with major risks tied to trade policy and economic data.
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Market Recovery and Trade Tensions:
The S&P 500 bounced back after a correction earlier this year, helped by President Trump easing some tariffs. However, the average tariff on U.S. imports is now at its highest since 1939, up sixfold since Trump took office. This has raised concerns among experts, with some warning of serious economic consequences.
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Economic Warning Signs:
The U.S. economy is showing stress. Consumer confidence in May dropped to its second-lowest level ever, and inflation expectations are at their highest since 1981. First-quarter GDP results suggest the U.S. may be nearing a recession, partly due to the impact of tariffs on imports. Economists now estimate a 45% chance of recession in the next year, up sharply from earlier in 2025.
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Earnings and Growth Outlook:
Wall Street analysts have cut their forecasts for corporate earnings growth in 2025 from 14% down to 8.5%, citing the drag from tariffs and slower economic growth.
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Wall Street’s 2025 Prediction:
Among 17 major Wall Street firms, the median year-end target for the S&P 500 is 5,900—almost unchanged from its current level. This suggests analysts expect the market to trade sideways, neither crashing nor soaring, unless there are major changes in trade policy or economic data.
|
Wall Street Firm |
S&P 500 Year-End Target |
Upside (Downside) |
|---|---|---|
|
Wells Fargo |
7,007 |
18% |
|
Fundstrat |
6,600 |
11% |
|
Morgan Stanley |
6,500 |
9% |
|
Yardeni Research |
6,500 |
9% |
|
Deutsche Bank |
6,150 |
3% |
|
BMO Capital |
6,100 |
3% |
|
Goldman Sachs |
6,100 |
3% |
|
Oppenheimer |
5,950 |
0% |
|
Barclays |
5,900 |
(1%) |
|
UBS |
5,800 |
(2%) |
|
Citigroup |
5,800 |
(2%) |
|
Bank of America |
5,600 |
(6%) |
|
Evercore |
5,600 |
(6%) |
|
HSBC |
5,600 |
(6%) |
|
RBC Capital |
5,550 |
(7%) |
|
Stifel |
5,500 |
(7%) |
|
JPMorgan |
5,200 |
(13%) |
|
Median |
5,900 |
(1%) |
Data source: Yahoo Finance.
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Upcoming Data Could Spark Volatility:
Key economic reports are due soon, including GDP revisions, consumer spending, inflation, and jobs data. These could trigger sharp market moves, even if the overall outlook is for stability.
What Should Investors Do?
With high uncertainty and mixed signals, investors should brace for continued volatility. The market’s direction will likely depend on future trade policy decisions and economic indicators. Staying informed and diversified is crucial.
