S&P 500 Expected to Reach 6,678.18 in 2025: Wall Street's 10% Growth Forecast

Key Insights for 2025

• Wall Street expects the S&P 500 to increase by around 10% in 2025, based on the latest analyst projections compiled by FactSet.
• In recent years, analysts have often underestimated the S&P 500’s performance, including a notable underestimation for 2024.
• Despite short-term underestimations, historical data over the past two decades shows analysts have generally overestimated annual returns by about 7%.

Following two consecutive years of double-digit returns, Wall Street is optimistic about a third straight year of strong gains for the S&P 500. The average target price for the index at the end of 2025 is forecasted at just above 6,678, which represents a roughly 10% increase from the closing price on Thursday, according to FactSet Research analyst John Butters.

Since its inception in 1957, the S&P 500 has delivered an average annual return of approximately 10.23%, aligning with current growth expectations.

John Butters' analysis highlights a significant underestimation by analysts entering 2024, with consensus estimates falling over 15% short of the actual market performance. This pattern of underestimation has occurred in four of the past five years.

However, looking at the long-term perspective, Wall Street has more frequently overestimated the market’s returns, with 13 out of the last 20 years showing overly optimistic predictions.

The upbeat forecasts reflect confidence in the resilience of the U.S. economy and corporate earnings growth. Major financial institutions like Morgan Stanley (MS) and Goldman Sachs (GS) anticipate the S&P 500 will reach 6,500 in 2025, driven by accelerating earnings across a broad range of companies.

Additionally, a recent survey of financial advisors revealed that two-thirds expect the S&P 500 to rise by at least 10% next year, although many caution that market volatility remains a possibility.

The S&P 500 is currently on track for a second consecutive year of gains exceeding 20%, a feat not seen since the 1990s. As of Thursday’s close, the index has surged 26.9% year-to-date. In comparison, the Dow Jones Industrial Average has climbed 16.5%, and the Nasdaq Composite has soared approximately 32.6%.

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