Stock market outlook: analysts see the S&P 500 hitting 8000 next year

During the shortened Thanksgiving week, the Dow Jones Industrial Average jumped more than 3%, the S&P 500 rose nearly 4%, and the Nasdaq jumped more than 4%.

This follows a sharp sell-off earlier this month amid fears that the AI ​​bubble will burst and suggestions that the Fed will not cut interest rates as much as expected.

“Santa is back,” market veteran Ed Yardeni announced in a note Saturday.

But the panic selling of bitcoin, which he and others on Wall Street said was a factor in the previous downturn, has subsided, and stocks are poised for a year-end rally.

Yardeni stood by his view that the S&P 500 will reach 7,000 by the end of the year and suggested the broad market index could reach that milestone next week.

If that happens, the S&P 500 will end 2025 with gains of 19%, after increases of more than 20% in each of the past two years.

The market could still post double-digit advances from there. Earlier in the week, Yardeni confirmed his forecast for the index to rise to 7,700 in 2026, suggesting a 10% increase from his view of 2025.

“We expect 2026 to be just another year of the Roaring 20s, which remains our baseline scenario,” he wrote. “Our Roaring 20s scenario has worked well for six years since we first predicted it in 2020.”

Growth in GDP, consumption and corporate profits were accelerating, and Yardeni said the decade should avoid an economy-wide recession, while a “persistent recession” could hit different industries at different times.

Deutsche Bank is more optimistic and expects the S&P 500 to end next year at 8,000 points, which represents a 17% jump from Friday’s close.

“We see stocks continuing to benefit from a surge in inflows across assets,” the analysts wrote in a note. “As earnings continue to rise and companies indicate they are committed to their capital allocation plans, we expect strong buybacks to continue.”

Elsewhere, JPMorgan expects the S&P 500 to end 2026 at 7,500, but added it could reach 8,000 if the Fed continues to cut interest rates.

Analysts pointed to above-trend earnings growth, a boom in capital spending on AI, rising shareholder payouts, and easing fiscal policy through tax cuts in president Donald Trump’s Big Beautiful Act.

If inflation declines more than expected, that would pave the way for additional interest rate cuts from the Fed beyond the two additional cuts seen by JPMorgan.

“Furthermore, the earnings benefits associated with deregulation and expanding productivity gains associated with AI remain underappreciated,” the bank said.