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Analysts Turn More Bullish on S&P 500 for 2025: ETFs to Bet On
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The S&P 500 has been enjoying a historic bull run buoyed by the AI boom, Fed rate cuts and Trump trade optimism. The broad index crossed multiple thresholds this year, reaching nearly 6,100, with many analysts expecting further gains in 2025. The S&P 500 is up 26.9% so far in 2024.
With Wall Street analysts turning more bullish on the S&P 500 and raising the target price on the index, investors could tap this opportune moment with ETFs that track the Index. These include SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) , SPDR Portfolio S&P 500 ETF (SPLG - Free Report) and Invesco S&P 500 Top 50 ETF (XLG - Free Report) .
Bullish Analysts Forecast
Oppenheimer has the most bullish forecast on Wall Street with the expectation that the S&P 500 will reach 7,100 in 2025, thanks in part to a resilient economy. Deutsche Bank has a 2025 high-end price target of 7,000 for the S&P 500.
BofA predicts the S&P 500 will reach 6,666 by the end of next year, up 10% from its target price of 6,050. BMO Capital Markets forecasts that the benchmark will reach 6,700 by year-end 2025. Evercore ISI has set a price target of 6,600 for the S&P by the middle of 2025, while Goldman Sachs expects that the S&P will end at 6,500 next year.
Factors Driving the Bullishness
Wall Street remains optimistic about the incoming administration’s economic agenda. Though President-elect Trump’s policies on restricting illegal immigration, enacting new tariffs, lowering taxes and reducing regulations will accelerate inflation, they will likely boost the economy. The anticipation of greater tariff barriers and a step to move manufacturing back home is expected to drive stocks higher (read: 5 Reasons Why Wall Street ETFs Could Gain in 2025).
The AI boom will continue to fuel a rally in the stock market. The expansion of AI applications holds the promise of ushering in fresh growth opportunities in the tech sector and beyond. The generative AI market is poised to explode at a CAGR of 42% to $1.3 trillion over the next 10 years from a market size of just $40 billion in 2022, according to a new report by Bloomberg Intelligence (BI).
Further, the prospect of lower interest bodes well for stocks next year. Low rates are generally favorable for growth stocks as they reduce the cost of borrowing, often needed to finance the expansion of companies. Lower rates typically reduce the attractiveness of fixed-income investments like bonds, leading investors to seek higher returns in the equity markets.
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7% of the assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector, while financials, consumer discretionary and healthcare round off the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 35 million shares. It has AUM of $638.5 billion and a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
With an AUM of $583.9 million, iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading in an average daily volume of 3 million shares. It charges just 3 bps in annual fees, 6 bps less than the State Street product. iShares Core S&P 500 ETF has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 504 stocks in its basket. It has amassed $589 billion in its asset base and charges investors 3 bps in annual fees. Vanguard S&P 500 ETF trades in an average daily volume of 4 million shares and has a Zacks ETF Rank #1 with a Medium risk outlook (read: Record ETF Cash Inflows Power Market Surge).
SPDR Portfolio S&P 500 ETF follows the S&P 500 Index and holds 503 stocks in its basket, with a 0.02% expense ratio. It has amassed $54.3 billion in its asset base and trades in a solid volume of 6 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #1.
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $7.7 billion and trades in a volume of about 1.1 million shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
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Analysts Turn More Bullish on S&P 500 for 2025: ETFs to Bet On
The S&P 500 has been enjoying a historic bull run buoyed by the AI boom, Fed rate cuts and Trump trade optimism. The broad index crossed multiple thresholds this year, reaching nearly 6,100, with many analysts expecting further gains in 2025. The S&P 500 is up 26.9% so far in 2024.
With Wall Street analysts turning more bullish on the S&P 500 and raising the target price on the index, investors could tap this opportune moment with ETFs that track the Index. These include SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) , SPDR Portfolio S&P 500 ETF (SPLG - Free Report) and Invesco S&P 500 Top 50 ETF (XLG - Free Report) .
Bullish Analysts Forecast
Oppenheimer has the most bullish forecast on Wall Street with the expectation that the S&P 500 will reach 7,100 in 2025, thanks in part to a resilient economy. Deutsche Bank has a 2025 high-end price target of 7,000 for the S&P 500.
BofA predicts the S&P 500 will reach 6,666 by the end of next year, up 10% from its target price of 6,050. BMO Capital Markets forecasts that the benchmark will reach 6,700 by year-end 2025. Evercore ISI has set a price target of 6,600 for the S&P by the middle of 2025, while Goldman Sachs expects that the S&P will end at 6,500 next year.
Factors Driving the Bullishness
Wall Street remains optimistic about the incoming administration’s economic agenda. Though President-elect Trump’s policies on restricting illegal immigration, enacting new tariffs, lowering taxes and reducing regulations will accelerate inflation, they will likely boost the economy. The anticipation of greater tariff barriers and a step to move manufacturing back home is expected to drive stocks higher (read: 5 Reasons Why Wall Street ETFs Could Gain in 2025).
The AI boom will continue to fuel a rally in the stock market. The expansion of AI applications holds the promise of ushering in fresh growth opportunities in the tech sector and beyond. The generative AI market is poised to explode at a CAGR of 42% to $1.3 trillion over the next 10 years from a market size of just $40 billion in 2022, according to a new report by Bloomberg Intelligence (BI).
Further, the prospect of lower interest bodes well for stocks next year. Low rates are generally favorable for growth stocks as they reduce the cost of borrowing, often needed to finance the expansion of companies. Lower rates typically reduce the attractiveness of fixed-income investments like bonds, leading investors to seek higher returns in the equity markets.
ETFs to Bet On
SPDR S&P 500 ETF Trust (SPY - Free Report)
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7% of the assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector, while financials, consumer discretionary and healthcare round off the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 35 million shares. It has AUM of $638.5 billion and a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
iShares Core S&P 500 ETF (IVV - Free Report)
With an AUM of $583.9 million, iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading in an average daily volume of 3 million shares. It charges just 3 bps in annual fees, 6 bps less than the State Street product. iShares Core S&P 500 ETF has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Vanguard S&P 500 ETF (VOO - Free Report)
Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 504 stocks in its basket. It has amassed $589 billion in its asset base and charges investors 3 bps in annual fees. Vanguard S&P 500 ETF trades in an average daily volume of 4 million shares and has a Zacks ETF Rank #1 with a Medium risk outlook (read: Record ETF Cash Inflows Power Market Surge).
SPDR Portfolio S&P 500 ETF (SPLG - Free Report)
SPDR Portfolio S&P 500 ETF follows the S&P 500 Index and holds 503 stocks in its basket, with a 0.02% expense ratio. It has amassed $54.3 billion in its asset base and trades in a solid volume of 6 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #1.
Invesco S&P 500 Top 50 ETF (XLG - Free Report)
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $7.7 billion and trades in a volume of about 1.1 million shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.