Citing slower economic development and ongoing inflation concerns, Stifel estimates the S&P 500 index would peak in the first half of 2025 then fall 10% to 15% in the second half.
Unlike Goldman Sachs (GS, Financial) and Morgan Stanley (MS, Financial), who see the S&P 500 ending 2025 at 6,500, the firm expects the index would drop to the mid-5,000s by late 2025, pointing to a negative view.
As likely catalysts for a market correction, Stifel strategists noted a possible slowing down in U.S. real GDP growth to 1.5% in the second half of 2025 and core personal consumption expenditure inflation still over the Federal Reserve's target.
Strategists say that the environment is far from favorable for continuous equity craze and while favoring conservative sectors. Driven by strength in big technology businesses known as the "Magnificent7," powered by the artificial intelligence boom and hopes for reduced interest rates, the S&P 500 has gained around 27% year-to-date.
