According to Deutsche Bank data, the US stock market bull market is expected to continue until 2025 due to strong investor demand for stocks and robust corporate activities such as buybacks and other expenditures.

Deutsche Bank's Chief Global Strategist Binky Chadha has set a target price of 7000 points for the S&P 500 index in 2025, implying that the index will increase by 17% from current levels.

"We expect that driven by strong risk appetite, strong inflows into stocks (and bonds) will continue," Chadha stated in a report to clients.

He wrote, "We expect the buyback scale of S&P 500 constituent companies to increase from the current annualized $1.1 trillion to about $1.3 trillion next year, in line with earnings growth. We believe that even under conservative estimates, the supply-demand backdrop for US stocks remains robust, which will drive the S&P 500 index to around 7000 points next year."

Due to an optimistic outlook on market-friendly policies from incoming President Trump, the S&P 500 index is expected to finish 2024 with strong performance.

The index hit a new intraday high on Monday, bringing its November gain to about 5% and its return for 2024 to 25.5% (excluding reinvested dividends).

For 2025, Deutsche Bank believes that the US economy will experience stronger growth in the context of potential tax cuts and deregulation from the incoming Trump administration.

Meanwhile, the German bank warned that Trump's protectionist trade and immigration policies could also pose a threat to its bullish argument. Deutsche Bank stated, "If the (Trump administration) places greater emphasis on radical trade and immigration policies, there is a higher likelihood of significant downside risks."

The bank stated, "This could be more detrimental to economic growth and push up inflation. This would lead the Federal Reserve to halt its rate-cutting cycle and could even consider restarting rate hikes, potentially putting upward pressure on bond yields."

Deutsche Bank is not the first Wall Street investment bank to issue an optimistic view on the stock market outlook after the presidential election.

UBS recently stated that what it calls the 'Roaring 20s' period for the stock market will continue, with the S&P 500 index expected to rise again next year to 7000 points, which is the most optimistic scenario. Goldman Sachs' forecast for the US stock market in 2025 shows that the index will rise by 11%.

Article reposted from: Jin Shi Data