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In light of that, it is worth considering both the S&P500 share returns on offer and the risks to those returns, across the New Year of 2025.
To begin, consider Wall Street sell-side strategist returns outlooks for 2025.
According to Investopedia, here are Wall Street S&P500 outlooks for 2025 --
After two years of double-digit stock returns, Wall Street thinks the S&P500 is capable of a threepeat.
The average analyst estimate points to the S&P500 finishing 2025 at just a bit over 6,679, suggesting that the index will rise about +10% in the next calendar year based on Thursday's close, according to a report from FactSet Research analyst John Butters.
Since its inception in 1957, the S&P500 index has returned +10.23% a year on average.
Butters also found that Wall Street analysts dramatically underestimated the market entering 2024. The consensus at the end of 2023 was that the S&P 500 would end this year at near 5,132, more than 15% below its current level. Analysts have underestimated stocks in four of the past five years.
However, over the long term, that streak of underestimation hasn't been the norm. Wall Street has overestimated the S&P 500's annual return in 13 of the last 20 years; on average, over the past two decades, the consensus has been too high by about 7%.
The report underscores the optimism on Wall Street about the strength of the U.S. economy and corporate profits. Morgan Stanley (MS) and Goldman Sachs (GS) have forecast the S&P 500 will rise to 6,500 next year as earnings growth accelerates for a broad swath of the index.
In a survey of financial advisors released last month, two-thirds said they expected the index to rise by at least +10% next year, but many warned that the market could experience some volatility.
The S&P 500 is on track to gain more than +20% for a second consecutive year, which hasn't happened since the 1990s.
Now, here are some risks to watch out for, considering both downside and upside surprises.
According to Capital Economics on Dec. 16th, 2024, here are the key risks in 2025:
What could go wrong (and right)?
Risk #1: Global trade war. Medium risk; medium-high impact...
Risk #2: Inflation flares up (again) Low-medium risk; high impact...
Risk #3: Fiscal missteps. High risk; medium impact...
Risk #4: Stock market bubble bursts...
Risk #5: An energy glut...
Risk #6: The growth stars align.
Zacks #1 Rank (STRONG BUY) Stocks
I present my final three top Zacks #1 rank stocks for the short-run, entering 2025.
These three large cap stocks also have top long-term Zacks Growth score of A or B.
(1) Allstate (ALL - Free Report) ): This is a $196 a share stock with a market cap of $51.8B. It is found in the U.S. insurance-property and casualty industry. I see a Zacks Value score of B, a Zacks Growth score of B, and a Zacks Momentum score of B.
(2) Vistra (VST - Free Report) ): This is a $144.50 a share stock with a market cap of $48.8B. It is found in the Utility-Electric Power industry. I see a Zacks Value score of D, a Zacks Growth score of A, and a Zacks Momentum score of F.
(3) Carvana (CVNA - Free Report) ): This is a $225 a share stock with a market cap of $46.5B. It is found in the Internet-Commerce industry. I see a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Momentum score of C.
Key Global Macro Indicators and Events
There are many useful manufacturing PMIs out this week.
On Monday, the Chicago manufacturing PMI comes out for DEC. The prior month’s reading was 40.2.
Mainland China’s manufacturing PMI also comes out for DEC. The prior month’s reading was 50.2.
On Tuesday, is a New Year holiday in a number of countries (Germany, Switzerland, Italy, Norway, Brazil, Japan, South Korea, Singapore, U.K. & Australia) among them.
On Wednesday, is a New Year holiday in the United States, and many other countries.
On Thursday, the Euro Zone’s manufacturing PMI for DEC comes out. The prior month’s reading was 45.2.
On Friday, the U.S. ISM manufacturing PMI for DEC comes out. The prior month’s reading was 48.4.
Conclusion
On Dec. 18th, 2024, Zacks Research Director Sheraz Mian offered up his final key points on S&P500 earnings:
(1) For Q4-24, total S&P 500 earnings are currently expected to be up +7.4% from the same period last year on +4.8% higher revenues.
(2) Q4-24 earnings growth improves to +9.5% once the Energy sector’s drag is removed from the aggregate numbers, but the growth pace drops to +4.0% once the Tech sector’s substantial contribution is excluded.
(3) Earnings estimates for the Q4-24 period have steadily come down since the quarter got underway, with the current +7.4% growth rate down from +9.8% in early October.
(4) Q-24 earnings for the ‘Magnificent 7’ group of companies are expected to be up +20.7% from the same period last year on +12.3% higher revenues.
Excluding the ‘Mag 7’ contribution, Q4 earnings for the rest of the index would be up only +3.4% (vs. +7.4%).
That is a wrap.
Enjoy an excellent start to this New Year!
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist
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Global Week Ahead: A New Year Rises
This is the last Global Week Ahead for 2024.
In light of that, it is worth considering both the S&P500 share returns on offer and the risks to those returns, across the New Year of 2025.
To begin, consider Wall Street sell-side strategist returns outlooks for 2025.
According to Investopedia, here are Wall Street S&P500 outlooks for 2025 --
After two years of double-digit stock returns, Wall Street thinks the S&P500 is capable of a threepeat.
The average analyst estimate points to the S&P500 finishing 2025 at just a bit over 6,679, suggesting that the index will rise about +10% in the next calendar year based on Thursday's close, according to a report from FactSet Research analyst John Butters.
Since its inception in 1957, the S&P500 index has returned +10.23% a year on average.
Butters also found that Wall Street analysts dramatically underestimated the market entering 2024. The consensus at the end of 2023 was that the S&P 500 would end this year at near 5,132, more than 15% below its current level. Analysts have underestimated stocks in four of the past five years.
However, over the long term, that streak of underestimation hasn't been the norm. Wall Street has overestimated the S&P 500's annual return in 13 of the last 20 years; on average, over the past two decades, the consensus has been too high by about 7%.
The report underscores the optimism on Wall Street about the strength of the U.S. economy and corporate profits. Morgan Stanley (MS) and Goldman Sachs (GS) have forecast the S&P 500 will rise to 6,500 next year as earnings growth accelerates for a broad swath of the index.
In a survey of financial advisors released last month, two-thirds said they expected the index to rise by at least +10% next year, but many warned that the market could experience some volatility.
The S&P 500 is on track to gain more than +20% for a second consecutive year, which hasn't happened since the 1990s.
Now, here are some risks to watch out for, considering both downside and upside surprises.
According to Capital Economics on Dec. 16th, 2024, here are the key risks in 2025:
What could go wrong (and right)?
Risk #1: Global trade war. Medium risk; medium-high impact...
Risk #2: Inflation flares up (again) Low-medium risk; high impact...
Risk #3: Fiscal missteps. High risk; medium impact...
Risk #4: Stock market bubble bursts...
Risk #5: An energy glut...
Risk #6: The growth stars align.
Zacks #1 Rank (STRONG BUY) Stocks
I present my final three top Zacks #1 rank stocks for the short-run, entering 2025.
These three large cap stocks also have top long-term Zacks Growth score of A or B.
(1) Allstate (ALL - Free Report) ): This is a $196 a share stock with a market cap of $51.8B. It is found in the U.S. insurance-property and casualty industry. I see a Zacks Value score of B, a Zacks Growth score of B, and a Zacks Momentum score of B.
(2) Vistra (VST - Free Report) ): This is a $144.50 a share stock with a market cap of $48.8B. It is found in the Utility-Electric Power industry. I see a Zacks Value score of D, a Zacks Growth score of A, and a Zacks Momentum score of F.
(3) Carvana (CVNA - Free Report) ): This is a $225 a share stock with a market cap of $46.5B. It is found in the Internet-Commerce industry. I see a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Momentum score of C.
Key Global Macro Indicators and Events
There are many useful manufacturing PMIs out this week.
On Monday, the Chicago manufacturing PMI comes out for DEC. The prior month’s reading was 40.2.
Mainland China’s manufacturing PMI also comes out for DEC. The prior month’s reading was 50.2.
On Tuesday, is a New Year holiday in a number of countries (Germany, Switzerland, Italy, Norway, Brazil, Japan, South Korea, Singapore, U.K. & Australia) among them.
On Wednesday, is a New Year holiday in the United States, and many other countries.
On Thursday, the Euro Zone’s manufacturing PMI for DEC comes out. The prior month’s reading was 45.2.
On Friday, the U.S. ISM manufacturing PMI for DEC comes out. The prior month’s reading was 48.4.
Conclusion
On Dec. 18th, 2024, Zacks Research Director Sheraz Mian offered up his final key points on S&P500 earnings:
(1) For Q4-24, total S&P 500 earnings are currently expected to be up +7.4% from the same period last year on +4.8% higher revenues.
(2) Q4-24 earnings growth improves to +9.5% once the Energy sector’s drag is removed from the aggregate numbers, but the growth pace drops to +4.0% once the Tech sector’s substantial contribution is excluded.
(3) Earnings estimates for the Q4-24 period have steadily come down since the quarter got underway, with the current +7.4% growth rate down from +9.8% in early October.
(4) Q-24 earnings for the ‘Magnificent 7’ group of companies are expected to be up +20.7% from the same period last year on +12.3% higher revenues.
Excluding the ‘Mag 7’ contribution, Q4 earnings for the rest of the index would be up only +3.4% (vs. +7.4%).
That is a wrap.
Enjoy an excellent start to this New Year!
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist