S&P 500 expected to rise by 11% in 2025 driven by strong earnings growth

From Investing.com: 2025-01-05 19:42:03

Goldman Sachs analysts predict the S&P 500 index will rise 11% in 2025 after a stellar performance in 2024, with gains expected to slow. The index is forecasted to reach 6,500 points this year, driven by strong earnings growth. Five stocks, including NVIDIA and Apple, were key contributors to the index’s returns.

The S&P 500 saw a significant return in 2024, mainly led by tech giants like Amazon and Alphabet. Goldman Sachs highlighted that the last time the index had consecutive annual gains of over 20% was in 1998 and 1999 before the Dotcom bubble burst. Earnings growth is forecasted to be 11% in 2025.

Investors have been cautious at the start of 2025, pulling back after strong gains in 2024. Uncertainty around U.S. interest rates and policies under President Donald Trump has weighed on risk appetite. The forward price to earnings multiple for the S&P 500 is expected to remain at 21.5 times by the end of 2025.

The communication services sector, driven by tech stocks, was a major force behind the S&P 500’s performance in 2024. However, the hype around artificial intelligence boosting these companies may slow down in 2025 as investors seek more clarity on its impact on corporate earnings. The tech-heavy Nasdaq outperformed the S&P 500 in 2024, rising approximately 29%.



Read more at Investing.com: S&P 500 to rise by 11% to 6,500 in 2025, Goldman Sachs says By Investing.com