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, iShares Core S&P 500 ETF IVV, Vanguard S&P 500 ETF VOO, SPDR Portfolio S&P 500 ETF SPLG and Invesco S&P 500 Top 50 ETF XLG.

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.