SPDR S&P 500 ETF Trust today
SPDR S&P 500 ETF Trust
(As of 12/24/2024 5:19 PM ET)
- 52 week range
- $466.43
▼
$609.07
- Dividend yield
- 1.17%
- Assets under management
- $636.46 billion
At the end of each year, scores of Wall Street analysts release their stock market forecasts for the following year. These include price target forecasts for the all-important S&P 500 index. These forecasts provide different perspectives on what level of success stock market investors can achieve in the next 12 months. Considering them together can help provide a balanced view.
However, these predictions should not be taken as truth. Predicting price movements in the mass market has historically been difficult. Below I summarize the S&P 500 forecasts published by Wall Street analysts. I’ll look at price targets derived from bottom-up and top-down analysis. Finally, I’ll tell you where the most accurate top-down forecasters of the last two years see the market heading.
FactSet Bottom-Up Analysis
Bottom-up analysis involves aggregating the median price targets of all stocks in the S&P 500 index. FactSet Research Systems New York Stock Exchange: FDSa well-known industry data provider, performed these calculations. Using December 11 price targets, the math projected the S&P 500 to hit 6,678 by the end of 2025. This represents an increase of almost 10% from the closing price on December 11th. Note that this return does not include dividends. Current dividend yield of SPDR S&P ETF Trust NYSEARCA: SPY is 1.2%.
SPDR S&P 500 ETF Dividend Payment
- Dividend yield
- 1.17%
- Annual dividends
- $7.01
- Next dividend payment
- January 31
SPY Dividend History
As of the close of trading on December 18, the index was significantly lower due to aggressive comments from the Federal Reserve regarding rate cuts in 2025. This will likely have a negative impact on these goals as analysts digest the information. For now, members of the Federal Open Market Committee are forecasting only two rate cuts in 2025. However, this could certainly change as financial conditions evolve.
FactSet analysis shows the healthcare, materials and energy sectors have the highest price returns, ranging from 16% to 20%. Meanwhile, analysts expect consumer discretionary rights to fall 3%, the biggest decline.
The study highlights that while analysts have underestimated the S&P 500’s 2024 returns by nearly 16%, they typically err on the side of overestimation. Using this bottom-up method, analysts have overestimated the S&P 500’s returns 65% of the time over the past 20 years. On average, target prices were 7% higher than the actual index price at the end of the year.
Another interesting point is the significant superiority of the Magnificent Seven stocks in terms of earnings growth in 2024. If estimates for the fourth quarter are correct, earnings growth for Magnificent Seven stocks will be more than 33%. Meanwhile, the remaining 493 S&P 500 stocks will see earnings growth of just over 4%. This led to a return. The Magnificent Seven ETF (MAGS), which is equally weighted among seven stocks, achieved a total return of 66% as of the December 18 close. That’s 2.7 times SPY’s 25% return.
Top-down forecasts paint a similar picture
Wall Street’s top stock strategists often make downward forecasts. They do not set price targets for individual stocks. Instead, they are responsible for shaping their firms’ views when it comes to overall stock market outlooks and sector weights. They feed various macroeconomic factors into the model to make their forecasts. This includes forecasts for monetary policy, gross domestic product (GDP) growth and employment.
The median of 17 downward forecasts compiled by Yahoo Finance puts the S&P 500’s year-end level at 6,600. That’s not too far from the 6,678 target. This represents a yield of 8.5% from the closing price on December 11th.
What two leading forecasters say about 2025
Among the 14 companies that provided downward price targets for the S&P 500 for 2023 and 2024, Oppenheimer and Deutsche Bank were the most accurate. On average, their forecasts missed year-end S&P 500 prices by 4%. Oppenheimer’s target of 5,900 was nearly reached in 2024, based on the December 18 close.
So what are these two firms predicting for 2025? They are two of the most bullish on Wall Street. Oppenheimer’s target is 7,100, while Deutsche Bank’s is 7,000. The average of these targets implies a 20% upside for the S&P 500 as of the December 18 close. One of the most bearish forecasts comes from Stiefel, suggesting a potential downside of 6%. To sum it up, Wall Street’s S&P 500 forecasts are just that: forecasts. They offer ideas and potential direction, but no one knows exactly what will happen in the next year. It will undoubtedly be an interesting trip.
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