LIVE MARKETS-Can the S&P 500 do what the Kansas City Chiefs couldn't?

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CAN THE S&P 500 DO WHAT THE KANSAS CITY CHIEFS COULDN'T?

In last Sunday's Super Bowl, the Kansas City Chiefs had the chance to do something that no NFL team has ever done, that is, score a three-peat.

"As this strategist watched the chances of a Super Bowl three-peat (three consecutive wins in the Big Game) virtually disappear in seemingly short order during the first half of last Sunday's game, the question came to mind about a three-peat by the S&P 500 index," writes the Wells Fargo Investment Institute's (WFII) senior global market strategist, Scott Wren, in a market commentary note.

Indeed, coming into 2025, the SPX has posted two 20%-plus total-return years in a row (total return includes index performance plus dividends paid).

According to Wren, only the late 1990s produced three 20%-plus total returns in a row for the benchmark index.

Does WFII expect an S&P 500 index three-peat this year?

"In short, no," says Wren.

WFII's 6,600 year-end SPX target implies around a 12% year-over-year rise. Add in a current S&P 500 dividend yield of 1.5%, and clearly Wren is not expecting another 20%-plus gain.

All may not be lost, however, as he says 12% is still a slightly better return than the longer-term historical average. And, despite uncertainties surrounding tariffs, a potential rebound in inflation, and/or a surge in bond yields, WFII sees good economic growth with consumers continuing to spend and the unemployment rate staying below its long-term average.

Wren continues to avoid defensive groups and is looking to increase exposure to cyclical sectors "when and if opportunities arise."

His bottom line is that "Three-peats do not happen often in sports or the market. But that doesn't mean investors shouldn't expect this year to be a good one for properly positioned portfolios."

(Terence Gabriel)

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