BMO Capital Markets sets 2025 year-end S&P 500 target at 6,700
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BMO CAPITAL MARKETS SETS 2025 YEAR-END S&P 500 TARGET AT 6,700
BMO Capital Markets' chief investment strategist, Brian Belski, has established a 2025 year-end S&P 500 index .SPX base case target of 6,700, which is roughly 14% above the current level of 5,890.
"We are approaching the upcoming year with slightly more caution compared to our market outlook from last year given the degree of market gains and valuation expansion that has occurred over the past two years," writes Belski in an Investment Strategy 2025 Market Outlook note.
He adds that "it is important to remember that this is a bull market that is now in its third year with all bull markets over the past 50 years lasting roughly six years."
In fact, according to Belski, all but one lasted at least three years – the pandemic rebound of 2020-22.
Thus, he still sees stocks continuing their upward trend for years to come, but, if history is any guide, he thinks the nearer-term path is likely to become more challenging.
"For instance, the third year of bull markets has historically been the weakest with single-digit average gains while a much larger percentage of index stocks suffer declines," he writes.
More importantly, BMO believes the slight 2H24 rotation out of tech titans is a trend that will likely continue and if so, given the sheer size of these stocks, big market gains will be more difficult, but not impossible, to achieve as the rest of the S&P 500 plays catch-up.
Therefore, Belski believes investors will need to own a little bit of “everything” and not lean too far in one direction or another from a sector, style, and size perspective.
With this, he believes active investment strategies will be key in 2025 as many of the biggest stocks that drove performance within sectors are unlikely to maintain their momentum next year, which will force investors to look further down the market cap spectrum.
(Terence Gabriel)
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