Deutsche Bank stated that even if the S&P 500 index cannot replicate this year's brilliance by 2025, the benchmark index will still achieve attractive double-digit returns.

In a report on Monday, analysts predicted that the S&P 500 index will reach 7000 points by the end of next year, indicating about a 17% growth potential from Monday's closing price of 5969 points.

A team led by U.S. Chief Equity and Global Strategist Bankim Chadha stated: "We expect strong stock (and bond) inflows to continue driven by strong risk appetite, although we anticipate a slowdown in growth."

So far, the index has risen by 25% due to the trading of popular large-cap tech stocks, positive data from the labor market, inflation, and GDP growth.

Looking ahead to 2025, Deutsche Bank analysts predict that the supply and demand backdrop of the market will be supported by active investor activity and strong corporate buybacks. It is estimated that companies will repurchase $1.3 trillion of their own stock from investors, up from $1.1 trillion this year.

Additionally, many indicators show that the stock market cycle has not yet peaked.

Chadha wrote: "We believe several aspects of the cycle are yet to come, including the shift from destocking to restocking; a rebound in capital expenditure outside the tech sector; a manufacturing recovery; rising consumer and business confidence; a recovery in capital markets and M&A activity; accelerated loan growth; and growth in other parts of the world."

Meanwhile, the Trump administration's policy mix may have both positive and negative components, and the order in which these policies are implemented will be crucial. Deutsche Bank expects tax cuts and deregulation to precede tariff policies.

As the main driver of the market rise, the earnings per share growth rate for S&P 500 constituents is expected to reach 11.6% next year, with earnings per share reaching $282, while the expected earnings per share growth rate for 2024 is 11%.

The bank stated: "Furthermore, if global economic growth reaches a historical high, then the earnings growth rate could rise to 17%, bringing the S&P 500 earnings per share to $295."

Analysts recommend that investors increase their holdings in financials, consumer cyclicals, and materials stocks. Deutsche Bank holds an underweight view on healthcare, consumer staples, and telecommunications sectors.

Deutsche Bank's outlook forecast puts it ahead of several bullish institutions on Wall Street. UBS and Morgan Stanley both expect the S&P 500 index to reach 6500 points next year, while investment firm BMO is preparing for it to reach 6700 points.

Article reposted from: Jinshi Data