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The S & P 500 will be propelled to new heights in the new year due to momentum in artificial intelligence, a resilient economy and the possibility of easier regulation on industries, according to JPMorgan. Strategist Dubravko Lakos-Bujas set 6,500 as his 2025 target for the broad market index. That implies upside of about 8% from Tuesday’s close. The U.S. will remain “the global growth engine with the business cycle in expansion, a healthy labor market, broadening of AI-related capital spending, and prospect of stronger capital market and deal activity,” Lakos-Bujas wrote. His outlook comes as U.S. equities enjoy a banner 2024, up 26% year to date due to enthusiasm around AI and a resilient economy. AI darling Nvidia has surged 176% for the year, while Meta Platforms has soared 62% during that time. .SPX YTD mountain SPX year to date The Federal Reserve began cutting rates in September as inflation began trending toward the central bank’s 2% goal. The labor market has also held up, with more than 100,000 jobs being added in all but one month this year. “US households are benefiting from a tight labor market, sitting on record wealth (+$10T over the past year to ~$165T as of 2Q24, +$50T since Covid), and potentially lower energy prices,” Lakos-Bujas said. More recently, investors have been cheering Donald Trump’s presidential election win, boosting expectations of lower taxes and deregulation across industries. The S & P 500 is up 4.1% since the Nov. 5 vote. “Heightened geopolitical uncertainty and the evolving policy agenda are introducing unusual complexity to the outlook, but opportunities are likely to outweigh risks. The benefit of deregulation and a more business-friendly environment are likely underestimated along with potential for unlocking productivity gains and capital deployment,” wrote the strategist. Lakos-Bujas highlighted AI and deregulation beneficiaries for clients to buy, including Coinbase, Alphabet, Microsoft, Exxon Mobil, Tesla, Toll Brothers and Citigroup. Other shops on Wall Street have also issued their 2025 outlooks. UBS said this week it sees the S & P 500 rising to 6,400 , while Goldman Sachs and Morgan Stanley expect an expansion to 6,500. Thus far, the most bullish forecast for the new year comes from Deutsche Bank, which anticipates the U.S. stock benchmark will jump to 7,000 . Lakos-Bujas’ 2024 forecast proved far too conservative. His 4,200, the lowest in the CNBC Pro Market Strategist Survey , implies 30% downside from Tuesday’s close.
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