Financial Services Association, October 11 (Editor: Huang Junzhi) The US stock market “boomed all the way” this year, making investors happy and excited. The S&P 500 has increased by 21.87% so far this year. As 2024 comes to an end, investors will no doubt start to wonder: can it still rise this much next year?

According to a survey of top analysts by consumer finance service company Bankrate, they seem to generally agree that the next 12 months may not be as optimistic. According to the third-quarter market expert survey report released by the company, these professionals expect the US stock market to rise by only 4.1% in the next four quarters, below the long-term annual average of 10%.

Respondents expect the S&P 500 to rise from 5,738 points at the end of the survey period to 5,975 points by the end of the third quarter of 2025. At the same time, analysts also prefer US stocks over international stocks, and they also believe that value stocks will be superior to growth stocks within the same time frame.

Mark Hamrick, senior economic analyst at Bankrate, said: “There are many uncertainties, so we have reason to be cautious about the outlook. Even so, the resilience of the US economy and the ability of the stock market to withstand multiple threats are still remarkable.”

US stocks will no longer “boom”

Market professionals surveyed by Bankrate expect US stocks to return more moderate over the next 12 months. They expect the average target price for the S&P 500 index for the quarter ending September 30, 2025 is 5,975 points.

Hamrick said, “Even when the Federal Reserve raised interest rates to their highest level in many years, the major stock indexes performed very well. Now that the central bank has begun an easing cycle, the “don't confront the Federal Reserve” concept should provide some comfort. But the Federal Reserve's mission has nothing to do with maintaining the upward momentum of the stock market.”

Michael K. Farr, president and CEO of Farr, Miller & Washington, said: “It looks like the Federal Reserve can avoid a recession, but it's still too early to have much confidence.”

Patrick J. O'Hare, chief market analyst at Briefing.com, said: “The number of first-time jobless claims continues to provide a hopeful sign of a soft landing, but judging from the history of past austerity cycles, it is difficult for people to fully believe that the Fed can achieve a soft landing.”

It's worth mentioning that top analysts are wary not only of next year, but of the next five years. 42% of respondents said the return over the next five years will be lower than the long-term return. 33% of respondents said the return would be about the same as the historical average. Only 25% said the return would be higher than the historical average.

The valuation is too high

Some analysts pointed out that since valuations are already high, they expect lower returns in the future.

Sameer Samana, senior global market strategist at Wells Fargo Investment Research Institute, said: “As we have returned to a level close to historic highs, unless the price-earnings ratio expands further (which seems unlikely), the return should be at the same level as earnings growth and slightly lower than the historical rate of return.”

Chris Fasciano, senior portfolio manager at Commonwealth Financial Network, stated, “As far as valuation is concerned, the current starting point is higher than normal, which makes it more difficult to obtain excess returns.”

Others acknowledge that current valuations are high, but still expect returns to be at the same level as historical levels, and point out that other factors should boost the stock market.

J. O'Hare said, “We are at the starting point of higher valuations, which should weaken return prospects, but since interest rates are expected to be lower, we should be able to achieve total returns in line with the historical average.”

Favoring value stocks

Growth stocks have been, to some extent, the darling of respondents to this type of survey over the past year, but that wasn't the case this time around. Value stocks attracted the attention of experts this quarter. They believe value stocks will outperform other stocks in the next four quarters.

Specifically, 42% of respondents would prefer value stocks over growth stocks over the next year. 33% think the returns will be roughly the same. 17% of respondents believe growth stocks will outperform value stocks.

Analysts pointed out, “At the beginning of a cycle of interest rate cuts, value stocks tend to outperform growth stocks.”

O'Hare said, “Given the performance gap with growth stocks, value stocks have the prospect of the greatest return over the next 12 months. If the Fed cuts interest rates because the economy is faltering, market participants tend to look for the best growth opportunities in an environment of weak growth. However, if economic growth remains constant and interest rates fall, then value stocks will have the best return prospects.”

“The third year of a bull market is usually quite challenging,” said Sam Stovall, chief investment strategist at CFRA Research. “Investors may be attracted to the safety of value stocks.”

Others believe that the performance of value stocks and growth stocks in the current market will be more balanced.

Fasciano predicts: “Profit growth will expand next year. Other relatively inexpensive areas in the market will begin to show better fundamentals. As a result, the gap between growth stocks and value stocks should begin to narrow.”

Chuck Carlson, CEO of Horizon Investment Services, said, “Falling inflation and interest rates are beneficial to both types of stocks.”