Bullish Outlook on U.S. Stock Market

BMO Capital Markets strategist Brian Belsky remains optimistic about the U.S. stock market, projecting that the S&P 500 will reach 6,700 by the end of 2025.

In his latest outlook, Belsky emphasizes that U.S. equities are experiencing a "20–25-year secular bull market," which commenced in 2009, consistently delivering robust returns despite periodic downturns.

While acknowledging that the "bull market can, will, and should slow its pace from time to time," he notes that the current economic environment—characterized by easing inflation, stable employment, and a supportive Federal Reserve—creates a conducive setting for sustained market advancements.

He predicts high single-digit price increases and double-digit earnings growth for 2025, portraying this as a "path to normalization" after recent market volatility.

Belsky also points to the resilience of the macroeconomic landscape in 2024, with jobless claims and other indicators suggesting further earnings growth is probable.

BMO anticipates that the S&P 500 will achieve earnings of $275 per share in 2025, building on a positive growth trajectory established this year. Belsky believes that the Fed's shift to easing monetary policy will further enhance corporate performance.

From an investment standpoint, Belsky recommends a balanced strategy, advocating for a "sector barbell" approach. He favors Technology for growth while viewing Financials as undervalued. Furthermore, he sees potential in smaller-cap stocks, which are showing signs of recovery in 2024, indicating broader equity participation ahead.

Despite urging caution due to high valuations and an anticipated rotation away from mega-cap stocks, his long-term optimism remains steady. "We still see stocks continuing their upward trend for years to come," he concludes, reinforcing his confidence in the strength of the secular bull market.