Stocks have experienced turmoil of late, but the long-term outlook points to sharp gains ahead, according to Piper Sandler. Craig Johnson, the firm’s chief market strategist, sees the S&P 500 rising to 6,600 by 2025. That’s 12.8% above where the benchmark closed on Tuesday. “The old Wall Street saying ‘Bull Markets Climb a Wall of Worry’ sums up the market’s narrative well,” Johnson wrote in the paper. “Over the past two years, equity markets have managed to maintain a consistent upward path despite a series of pullbacks/corrections, economic concerns, geopolitical tensions, inflation fears, rising interest rates and pessimistic headlines.” “As the Bull Market enters its third year, the combination of a well-telegraphed shift in Fed policy, a flattening of the yield curve and a shift in market leadership suggests it is poised for further expansion next year,” Johnson said. added. That extension of the current bull market will come after a spectacular rally in 2024. This year, the S & P 500 is up 22.7%. Johnson expects financial, technology and industrial stocks to lead the broader market index higher in the new year. He also sees smaller stocks that perform better than mega cap names. To be sure, Wall Street must fly between several headwinds before the end of the year, including rising Treasury yields and the US presidential election. Once those hurdles are over, the bull market should continue to march higher, according to Johnson. Elsewhere on Wall Street this morning, Baird downgraded McDonald’s to market outperform, citing the recent outbreak of E. coli from fast food outlets. “Although we are confident that the MCD will eventually be able to successfully manage the issue of E. coli, the heightened risk associated with the outlook for the near term US demand gives us pause while at the same time we see signs of a challenging economic environment. outside the US,” wrote commentator David Tarantino.
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