Overview

• Stifel forecasts the S&P 500 will drop 10%-15% in the second half of 2025, ending the year in the mid-5,000s due to slower economic growth and persistent inflation.
• BCA Research predicts a steeper decline, expecting the S&P 500 to fall 27% to 4,450 by year-end 2025, driven by recession risks and fading consumer spending momentum.
• Most Wall Street analysts remain optimistic, with the average S&P 500 year-end target at 6,539, reflecting an 8% potential upside from current levels.
• Stifel highlights extreme stock market valuations and expects the Federal Reserve to pause rate cuts early in 2025, keeping rates at 4%, which could pressure equities.
• Both Stifel and BCA Research recommend defensive sectors like healthcare, utilities, and consumer staples as safer investment options in a potentially challenging market environment.