"S&P 500 to Reach 7000 by End of Next Year," Deutsche Bank Also Predicts Bullish Trend

German investment bank Deutsche Bank has joined the ranks of Wall Street bulls by projecting the S&P 500 index to reach 7000 by the end of next year. The 7000 target set by Deutsche Bank is the highest among the forecasts released so far by major Wall Street investment institutions.

Reuters Yonhap News

Vinky Chada, Deutsche Bank's Chief Global Strategist, stated on the 25th (local time) that based on strong stock investment demand and robust corporate activities including share buybacks, the S&P 500 index could surpass 7000 by the end of 2025. This implies an additional upside potential of about 17% compared to the S&P 500 closing price of 5987.37 on that day.

Chada said, "Fueled by strong investor sentiment, inflows into the stock (and bond) markets are expected to continue steadily," adding, "The scale of share buybacks by S&P 500-listed companies is also expected to expand from the current annual level of $1.1 trillion to $1.3 trillion next year, in line with earnings growth." He predicted, "Even with a conservative estimate, demand for U.S. stocks will remain solid, pushing the S&P 500 to 7000 next year."

In particular, Chada described the U.S.'s low unemployment rate and growth rate close to 3% as a "historically rare strong combination." This is positive for corporate earnings outlooks and stock investment demand. He cited the 1960s and the late 1990s as similar macroeconomic environments when strong stock market rallies also occurred. Furthermore, he noted that the second term of the Donald Trump administration, starting in January next year, could support growth by actively pursuing tax cuts and deregulation. He forecasted, "The combination of increased corporate confidence and eased regulations will trigger a rebound in mergers and acquisitions (M&A) and capital market activities."

The 7000 target proposed by Deutsche Bank is among the highest in forecasts tracked by Yahoo Finance from major Wall Street investment institutions, alongside Yadani Research. Earlier, Ed Yadani, CEO of Yadani Research, also predicted the S&P 500 would reach 7000 by the end of next year, citing the launch of a business-friendly second Trump administration as a key factor. In an interview with Yahoo Finance, he said, "Undoubtedly, a more pro-business administration that will cut taxes is coming," adding, "Various tax cuts will apply not only to corporations but also to individuals. There will also be many deregulations."

However, concerns have been raised that the Trump administration's more aggressive protectionist and immigration policies could pose risks. Chada noted, "If tougher trade and immigration policies take precedence, they could negatively impact economic growth and push inflation up again," adding, "This could lead the Federal Reserve (Fed) to halt its rate-cutting cycle and reconsider raising interest rates. In that case, upward pressure on government bond yields would also occur."

UBS recently projected the S&P 500 index to reach 6600 by the end of next year, while noting that the market could reach 7000 if it gains stronger momentum. BMO Capital and RBC Capital Markets forecast 6700, Barclays 6600, and Morgan Stanley and Goldman Sachs both project 6500.