Stock market outlook for the next 12 months: Here’s what top analysts are predicting into 2025
The stock market has been on a tear in 2024, with the S&P 500 rising by nearly 21 percent over the first three quarters of the year. But the situation may not be so brisk over the coming 12 months, say analysts in Bankrate’s Third-Quarter Market Mavens Survey. These pros expect the market to rise just 4.1 percent over the coming four quarters, below its long-term annual average of 10 percent.
The survey’s respondents see the S&P 500 climbing from 5,738 at the end of the survey period to 5,975 by the end of the third quarter of 2025. It’s the 16th straight survey where the analysts have projected a gain in the year ahead. The analysts also preferred U.S. stocks over international ones, and they think value stocks will outperform growth stocks over a similar time frame.
“Reflecting multiple sources of uncertainty, there are some reasons to be cautious about the outlook,” says Mark Hamrick, Bankrate’s senior economic analyst. “Even so, the resilience of the U.S. economy and the stock market’s ability to power through multiple threats taken together have been nothing short of remarkable.”
Here are the highlights from Bankrate’s quarterly Market Mavens Survey.
Forecasts and analysis:
This article is one in a series discussing the results of Bankrate’s Third-Quarter 2024 Market Mavens Survey:
- Survey: Market strategists see 10-year Treasury yield at 3.5% a year from now
- Best moves for long-term investors with stocks near all-time highs, according to market experts
- Stock market outlook for the next 12 months: Here’s what top analysts are predicting into 2025
Stocks to inch higher in next 12 months, say analysts
The S&P 500 has had a really strong run since the start of 2023, and while it’s definitely had some hiccups in 2024, this year has been notably strong, too. But the market pros surveyed by Bankrate expected more muted returns over the next 12 months. The average estimate for the S&P 500 is 5,975 for the quarter ending Sept. 30, 2025 — up 4.1 percent from 5,738 at the end of the recent survey period on Sept. 27, 2024.
In the second-quarter survey, analysts estimated a similar 4 percent gain in the year ahead.
“The major averages have fared remarkably well even when the Federal Reserve was raising interest rates to the highest levels in years,” says Hamrick. “Now that the central bank has begun an easing cycle, the notion ‘don’t fight the Fed’ should provide some reassurance. At the same time, the Fed’s mandate has nothing to do with preserving stock market gains or momentum.”
“It looks like the Fed can avoid recession, but it’s much too early to have great conviction,” says Michael K. Farr, president and CEO, Farr, Miller & Washington.
“Initial jobless claims continue to provide a hopeful sign that a soft landing can be achieved, yet the history of past tightening cycles leaves a lot to be desired in terms of being fully confident in the Fed sticking the soft landing,” says Patrick J. O’Hare, chief market analyst, Briefing.com.
Experts remain cautious about 5-year stock returns
The market’s bull run has left market watchers cautious about not only the next year, but also the next five years.
Here’s how they estimate the market’s returns over the next half-decade compared to average historical returns of around 10 percent per year.
- Forty-two percent said returns over the next five years will be lower than long-term returns.
- Thirty-three percent of respondents said returns will be about the same as their historical average.
- Twenty-five percent said returns will be above the historical average.
The results of the previous four Market Mavens surveys are shown below for comparison.
Some analysts pointed to already-high valuations for why they expected lower future returns.
“Given that we’re back close to all-time highs, barring additional expansion of multiple, which seems unlikely, returns should equal earnings growth and be a little lower than historical returns,” says Sameer Samana, senior global market strategist, Wells Fargo Investment Institute.
“The current starting point in terms of valuations is higher than normal, making outsized returns harder to come by,” notes Chris Fasciano, senior portfolio manager, Commonwealth Financial Network.
Others acknowledge today’s high valuations but nevertheless expect returns that are in line with historical levels and point to other factors that should boost stocks.
“We are starting from a point of higher valuations that should curtail return prospects, but with rates expected to be lower, we should be able to achieve total returns in-line with the historical average,” says O’Hare.
US stocks remain the place to be
The Market Mavens typically favor U.S. stocks over their international counterparts, and it was no different in this latest quarter.
- Seventy-five percent of respondents favor U.S. stocks over the coming year.
- Seventeen percent picked international stocks to outperform U.S. equities.
- Eight percent said the returns between the two would be about the same.
The preference for U.S. stocks was down a bit from the second-quarter survey, when 90 percent tapped them to outperform. They were preferred by 83 percent of respondents in the first quarter.
Respondents offered a variety of reasons why they tapped U.S. stocks to outperform global stocks.
“The U.S. still looks like the most robust market over the next year based on the earnings outlook, which will be fortified by wage moderation and lower rates,” says Dec Mullarkey, managing director, SLC Management. “U.S. companies have also maintained high margins and delivered strong growth through difficult periods and are expected to keep margins high.”
“U.S. companies will have better fundamentals and earnings growth over the next 12 months than overseas companies will have due to economic and geopolitical headwinds impacting those markets,” says Fasciano.
But others point to higher U.S. valuations and favorable monetary policy abroad as reasons to like global stocks.
“Most major central banks will continue to cut rates in coming months, which will fuel buying interest here and abroad,” says O’Hare. “Nonetheless, higher valuations in the U.S. will have investors looking for new opportunities with less valuation risk. That approach should favor global equities over U.S. stocks.”
Pros flip to prefer value stocks over growth in the year ahead
Growth stocks have been something of a darling for this survey’s respondents over the past year, but not this time out. Value stocks captured the experts’ eye this quarter, with them seeing value-priced equities outperforming over the next four quarters.
- Forty-two percent of respondents prefer value stocks to growth stock over the next year.
- Thirty-three percent think returns will be about the same.
- Seventeen percent favor growth stocks to outperform value.
- Eight percent offered no comment.
The preference for growth stocks dropped sharply from its strong perch in recent quarters.
Investors cited various reasons for their preferences, in particular historical performance.
“Value tends to outperform growth at the start of a rate-cutting cycle,” notes Mullarkey.
“Value holds the prospect (key word) for the greatest returns over the next 12 months given the performance gap seen versus growth stocks,” says O’Hare. “If the Fed is cutting rates because the economy is faltering, market participants are apt to seek out the best growth opportunities in a weakening growth environment. However, if economic growth holds up and rates come down, value would be the place to be for the best return prospects.”
“Third years of bull markets are typically quite challenging,” says Sam Stovall, chief investment strategist, CFRA Research. “Investors will likely gravitate to the safety of value stocks.”
Others thought the performance of value and growth would be more even at this point in the market.
“The breadth of earnings growth will broaden over the next year,” Fasciano predicts. “Other areas of the market which trade cheap on a relative basis will begin to show better fundamentals. The gap in performance between growth and value should begin to narrow as a result.”
“Falling inflation and interest rates should help both classes equally,” says Chuck Carlson, CFA, CEO, Horizon Investment Services.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
