The inventory market has been on a tear in 2024, with the S&P 500 rising by practically 21 p.c over the primary three quarters of the yr. However the scenario will not be so brisk over the approaching 12 months, say analysts in Bankrate’s Third-Quarter Market Professionals Survey. These professionals count on the market to rise simply 4.1 p.c over the approaching 4 quarters, beneath its long-term annual common of 10 p.c.
The survey’s respondents see the S&P 500 climbing from 5,738 on the finish of the survey interval to five,975 by the tip of the third quarter of 2025. It’s the sixteenth straight survey the place the analysts have projected a achieve within the yr forward. The analysts additionally most well-liked U.S. shares over worldwide ones, and so they suppose worth shares will outperform development shares over an identical timeframe.
“Reflecting a number of sources of uncertainty, there are some causes to be cautious concerning the outlook,” says Mark Hamrick, Bankrate’s senior financial analyst. “Even so, the resilience of the U.S. financial system and the inventory market’s capacity to energy by way of a number of threats taken collectively have been nothing wanting exceptional.”
Listed here are the highlights from Bankrate’s quarterly Market Professionals Survey.
Forecasts and evaluation:
This text is one in a sequence discussing the outcomes of Bankrate’s Third-Quarter 2024 Market Professionals Survey:
Shares to inch increased in subsequent 12 months, say analysts
The S&P 500 has had a extremely robust run for the reason that begin of 2023, and whereas it’s positively had some hiccups in 2024, this yr has been notably robust, too. However the market professionals surveyed by Bankrate anticipated extra muted returns over the following 12 months. The typical estimate for the S&P 500 is 5,975 for the quarter ending Sept. 30, 2025 — up 4.1 p.c from 5,738 on the finish of the current survey interval on Sept. 27, 2024.
Within the second-quarter survey, analysts estimated an identical 4 p.c achieve within the yr forward.
“The main averages have fared remarkably nicely even when the Federal Reserve was elevating rates of interest to the best ranges in years,” says Hamrick. “Now that the central financial institution has begun an easing cycle, the notion ‘don’t battle the Fed’ ought to present some reassurance. On the identical time, the Fed’s mandate has nothing to do with preserving inventory market features or momentum.”
“It appears just like the Fed can keep away from recession, but it surely’s a lot too early to have nice conviction,” says Michael Okay. Farr, president and CEO, Farr, Miller & Washington.
“Preliminary jobless claims proceed to offer a hopeful signal {that a} mushy touchdown will be achieved, but the historical past of previous tightening cycles leaves lots to be desired by way of being totally assured within the Fed sticking the mushy touchdown,” says Patrick J. O’Hare, chief market analyst, Briefing.com.
Specialists stay cautious about 5-year inventory returns
The market’s bull run has left market watchers cautious about not solely the following yr, but in addition the following 5 years.
Right here’s how they estimate the market’s returns over the following half-decade in comparison with common historic returns of round 10 p.c per yr.
- Forty-two p.c stated returns over the following 5 years can be decrease than long-term returns.
- Thirty-three p.c of respondents stated returns can be about the identical as their historic common.
- Twenty-five p.c stated returns can be above the historic common.
The outcomes of the earlier 4 Market Professionals surveys are proven beneath for comparability.
Some analysts pointed to already-high valuations for why they anticipated decrease future returns.
“Provided that we’re again near all-time highs, barring extra growth of a number of, which appears unlikely, returns ought to equal earnings development and be somewhat decrease than historic returns,” says Sameer Samana, senior world market strategist, Wells Fargo Funding Institute.
“The present place to begin by way of valuations is increased than regular, making outsized returns tougher to return by,” notes Chris Fasciano, senior portfolio supervisor, Commonwealth Monetary Community.
Others acknowledge right now’s excessive valuations however however count on returns which can be in keeping with historic ranges and level to different elements that ought to increase shares.
“We’re ranging from a degree of upper valuations that ought to curtail return prospects, however with charges anticipated to be decrease, we must always be capable of obtain whole returns in-line with the historic common,” says O’Hare.
US shares stay the place to be
The Market Professionals usually favor U.S. shares over their worldwide counterparts, and it was no totally different on this newest quarter.
- Seventy-five p.c of respondents favor U.S. shares over the approaching yr.
- Seventeen p.c picked worldwide shares to outperform U.S. equities.
- Eight p.c stated the returns between the 2 could be about the identical.
The choice for U.S. shares was down a bit from the second-quarter survey, when 90 p.c tapped them to outperform. They have been most well-liked by 83 p.c of respondents within the first quarter.
Respondents supplied quite a lot of the reason why they tapped U.S. shares to outperform world shares.
“The U.S. nonetheless appears like essentially the most sturdy market over the following yr primarily based on the earnings outlook, which can be fortified by wage moderation and decrease charges,” says Dec Mullarkey, managing director, SLC Administration. “U.S. firms have additionally maintained excessive margins and delivered robust development by way of troublesome durations and are anticipated to maintain margins excessive.”
“U.S. firms may have higher fundamentals and earnings development over the following 12 months than abroad firms may have because of financial and geopolitical headwinds impacting these markets,” says Fasciano.
However others level to increased U.S. valuations and favorable financial coverage overseas as causes to love world shares.
“Most main central banks will proceed to chop charges in coming months, which is able to gasoline shopping for curiosity right here and overseas,” says O’Hare. “Nonetheless, increased valuations within the U.S. may have buyers on the lookout for new alternatives with much less valuation threat. That strategy ought to favor world equities over U.S. shares.”
Execs flip to desire worth shares over development within the yr forward
Development shares have been one thing of a darling for this survey’s respondents over the previous yr, however not this day out. Worth shares captured the consultants’ eye this quarter, with them seeing value-priced equities outperforming over the following 4 quarters.
- Forty-two p.c of respondents desire worth shares to development inventory over the following yr.
- Thirty-three p.c suppose returns can be about the identical.
- Seventeen p.c favor development shares to outperform worth.
- Eight p.c supplied no remark.
The choice for development shares dropped sharply from its robust perch in current quarters.
Buyers cited numerous causes for his or her preferences, specifically historic efficiency.
“Worth tends to outperform development at the beginning of a rate-cutting cycle,” notes Mullarkey.
“Worth holds the prospect (key phrase) for the best returns over the following 12 months given the efficiency hole seen versus development shares,” says O’Hare. “If the Fed is chopping charges as a result of the financial system is faltering, market members are apt to hunt out one of the best development alternatives in a weakening development surroundings. Nonetheless, if financial development holds up and charges come down, worth could be the place to be for one of the best return prospects.”
“Third years of bull markets are usually fairly difficult,” says Sam Stovall, chief funding strategist, CFRA Analysis. “Buyers will probably gravitate to the security of worth shares.”
Others thought the efficiency of worth and development could be extra even at this level out there.
“The breadth of earnings development will broaden over the following yr,” Fasciano predicts. “Different areas of the market which commerce low cost on a relative foundation will start to indicate higher fundamentals. The hole in efficiency between development and worth ought to start to slender because of this.”
“Falling inflation and rates of interest ought to assist each courses equally,” says Chuck Carlson, CFA, CEO, Horizon Funding Companies.
Editorial Disclaimer: All buyers are suggested to conduct their very own unbiased analysis into funding methods earlier than investing choice. As well as, buyers are suggested that previous funding product efficiency is not any assure of future worth appreciation.
