Wall Street Analysts Predict 15% S&P 500 Surge: Market Recovery on the Horizon?

Wall Street Sees Potential Market Recovery Amid Recent Decline

The recent stock market decline, largely attributed to President Donald Trump’s trade policies and growing recession fears, has led to significant losses in market capitalization for the S&P 500. The index entered correction territory last week, recording its worst weekly performance in two years.

Despite the downturn, prominent Wall Street forecasters, including Morgan Stanley and Citi, suggest that the market may be nearing its bottom. Morgan Stanley has identified five key reasons for a potential market recovery, including oversold conditions in major stock averages, improved sentiment and positioning gauges, and positive seasonal indicators for the latter half of the month. The firm also notes that a weakened US dollar could lead to positive corporate earnings revisions, while lower interest rates may boost economic surprise indexes.

Citi’s analysis paints a similar picture, viewing the S&P 500 at a healthier valuation following the sell-off. The bank notes that the “Magnificent Seven” tech stocks are now more rationally valued, and with the S&P 500 down 10% from its record high, the risk-reward balance has improved. Citi maintains a long-term positive outlook based on productivity gains, AI advancements, and business model maturation.

Both Morgan Stanley and Citi have maintained their year-end price targets of 6,500 for the S&P 500, projecting a 15% gain by the end of 2025. However, the bear case remains a concern, with continued pessimism surrounding a potential US growth slowdown. Goldman Sachs and RBC have downgraded their S&P 500 price targets to 6,200, while Citi’s worst-case scenario sees the index falling to 5,100. Morgan Stanley’s recession scenario could push the index as low as 4,600.

In the current political climate, the Trump administration appears unlikely to intervene in market fluctuations. Treasury Secretary Scott Bessent views market corrections as healthy, while President Trump has acknowledged the potential recession risks associated with his policy decisions.

As investors navigate these uncertain waters, the contrasting views from major financial institutions highlight the complex factors at play in the current market environment.