Since Trump's victory, the US stock market has been filled with cheers and excitement, with the S&P 500 index even breaking through the important threshold of 6000 points at one point. Overall, Wall Street is very optimistic about the trend of the US stock market next year, and several investment banks have raised their target levels for the S&P 500 index.
UBS is one of them. The bank pointed out in its latest research report that this period of prosperity, marked by strong economic growth and market returns, may continue until 2025. In the most optimistic scenario, the S&P 500 index is expected to rise to 7000 points next year.
The bank stated that the expectation of the 'Roaring Twenties' has emerged.
Mark Haefele, Chief Investment Officer of UBS Global Wealth Management, wrote, "The market and economic development have led some to refer to this decade as the 'Roaring Twenties', characterized by high economic growth, strong market returns, and increasing productivity
This strategist believes that if the Trump administration lowers taxes and relaxes regulations to add momentum to the bullish narrative built on steady growth and sustained investment in artificial intelligence, the US stock market may further rise.
UBS's current basic expectation is that by the end of 2025, the S&P 500 index will rise to 6600 points; In the most optimistic expectation, the index can rise to 7000 points.
However, at the same time, Haefele stated that there are still some risks that could undermine UBS's bullish argument, including aggressive trade tariffs, widening deficits between government spending and revenue, and geopolitical conflicts, all of which could push up inflation and exacerbate market volatility.
Although we believe that selectively imposing tariffs on goods imported by the United States from other countries is not enough to disrupt US economic growth, the comprehensive imposition of tariffs will increase the risk of stagflation in the United States, "he wrote.
Coincidentally, there is no exception. Yardeni Research, a market research firm, also believes that given Trump's victory and the Republican Party's domination of both houses of Congress, the likelihood of a "roaring 1920s" scenario is increasing. The company expects that the new Trump administration may push the S&P 500 index up to 7000 points by the end of next year.
The company expects that the new government will be more "business friendly" in promoting tax cuts and relaxing regulations. Corporate tax cuts may make companies more profitable: Based on Trump's plan to quickly lower the corporate tax rate from 21% to 15%, the S&P 500 index's earnings per share for 2025 will be raised from $275 to $285.
Furthermore, Morgan Stanley stated in its recent annual outlook report that its basic expectation is that the S&P 500 index will rise to 6500 points by the end of 2025, with a target price of 7400 points in a bull market scenario.
According to Michael Wilson, Chief Investment Officer of Morgan Stanley, the Federal Reserve's interest rate cuts, coupled with improved economic growth and a potential wave of deregulation under the incoming Trump administration, suggest that investors should lean towards bullish sentiment in the stock market.