LIVE MARKETS-LPL Research expects stocks to post modest gains in 2025
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LPL RESEARCH EXPECTS STOCKS TO POST MODEST GAINS IN 2025
In LPL Research's "Outlook 2025" released earlier this month, chief equity strategist Jeffrey Buchbinder says to "expect modest stock market gains" next year, supported by a stable economy, solid corporate profits, and a Fed that is no longer hawkish, as well as some potential deregulation tailwinds.
"With stocks pricing in a lot of good news, positive surprises may be tougher to come by, so a repeat of the strong market performance in 2024 is unlikely," Buchbinder writes.
And with the bull market another year older, interest-rate risk rising, elevated valuations, and significant geopolitical tensions, he believes volatility is likely to be more prevalent in 2025.
Buchbinder's bottom line is that "Assuming a forward P/E multiple of 23 times 2026 EPS of $275, LPL Research estimates a fair value target range of 6,275–6,375 for the S&P 500 at the end of 2025. Upside could come from lower interest rates, productivity gains, or prospects for further tax cuts."
(The mid-point of the target range is 6,325, which is about 5.2% above the current S&P 500 index .SPX level of ~6,015).
In terms of S&P 500 sectors, LPL's favored groups (overweight) as 2025 begins are communications services .SPLRCL and industrials .SPLRCI. LPL rates energy .SPNY and real estate .SPLRCR underweight.
LPL is neutral on the other seven sectors. That said, Buchbinder says to watch for tactical opportunities in consumer discretionary .SPLRCD and financials .SPSY, supported by resilient consumer spending and deregulation.
(Terence Gabriel)
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