'Bubble may be far from bursting': Capital Economics says S&P 500 could hit 6,500 by end of next year (2024)

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'Bubble may be far from bursting': Capital Economics says S&P 500 could hit 6,500 by end of next year? ›

But, for now, we are sticking to our view that this one will inflate through the end of next year. Our end-2025 forecast of 6,500 for the index is premised on its valuation reaching a similar level to its peak during the dot com mania.

Capital Economics chief market economist John Higgins predicts the S&P 500 can hit 6,500 by the end of 2025. This outlook is more dependent on the current AI-fueled bubble growing. For now, he maintains the bubble-like trade in the market can bring the benchmark average to 6,500 by the end of 2025.

Mike Wilson, Morgan Stanley's chief U.S. equity strategist, said he sees the S&P 500 climbing to 5,400 by the second quarter of 2025.

Analysts expect overall S&P 500 earnings to rise 10.4% in 2024, LSEG data showed. But stocks are also at high valuation levels. The S&P 500 trades at a forward price-to-earnings ratio - a commonly used metric to value stocks - of 20.9, well above the index's historic average of 15.7, according to LSEG Datastream.

In terms of a price target, Bank of America is targeting S&P 500 5,150 to 8,700 with its S&P 500 price forecast for 2030.