According to Deutsche Bank, the bull market appears set to continue its upward climb through 2025, fueled by a healthy demand for stocks among investors and vigorous corporate actions such as buybacks. They’re forecasting that the S&P 500 could climb to 7,000, a prospect supported by Binky Chadha, Deutsche Bank’s chief global strategist. He has projected a year-end 2025 target for the S&P 500 at 7,000, which would represent a 17% increase from its current standing. “We anticipate significant equity and bond inflows as investors show a strong appetite for risk,” Chadha mentioned in a client note. “Buybacks for the S&P 500 are expected to increase from the current annual pace of $1.1 trillion to about $1.3 trillion next year, as they rise in alignment with earnings. This robust demand and supply environment for U.S. equities should remain strong, even with conservative estimates, pushing the S&P 500 close to 7,000 next year.”
The S&P 500 is on track to end a strong 2024 with impressive gains, much of which is attributed to optimism surrounding the market-friendly stance of President-elect Donald Trump. The benchmark hit yet another intraday high on Monday, bringing its November gains to around 5% and its 2024 return to 25.5%, not including reinvested dividends. Looking ahead to 2025, Deutsche Bank anticipates robust U.S. growth driven by potential tax cuts and deregulation initiatives from the incoming Trump administration. However, they caution that Trump’s protectionist trade and immigration policies might undermine this optimistic outlook. “The primary risks could materialize if aggressive trade and immigration stances are prioritized,” Deutsche Bank warned. “This scenario could be detrimental to growth and increase inflation, prompting the Federal Reserve to halt the interest rate cutting cycle, and possibly even consider rate hikes, which would likely increase bond yields.”
Deutsche Bank isn’t alone in its enthusiastic outlook post-election. UBS has similarly predicted a continuation of what it terms a “Roaring 20s” period for stocks, suggesting the S&P 500 could also rise to 7,000 under its most confident scenario. Meanwhile, Goldman Sachs’ 2025 forecast predicts an 11% gain for stocks, albeit in a more conservative estimate than Deutsche Bank’s buoyant prediction.
