RBC hikes year-end S&P 500 target as investors look to 2026 for gains

CNBC

a day ago

Another Wall Street firm has upped its S & P 500 year-end target — though not without concerns. RBC Capital Markets raised its 2025 S & P 500 target to 6,250 from 5,730. It's a roughly 9% hike that nevertheless is where the broader index was last hovering on Monday, suggesting the benchmark will continue to chop and churn in the second half with nowhere to go. "We feel neutral on the outlook for stocks in the 2nd half of 2025, and are mindful that our new price target is essentially in line with recent levels," Lori Calvasina, head of U.S. equity strategy at RBC, wrote on Sunday. "As a reminder, we see our price target as a compass, not a GPS, and a signaling mechanism about the path that we believe the stock market is currently on," Calvasina said. "We expect choppy conditions in the back half of the year, and swings in both directions." .SPX 1D mountain S & P 500 The target change is the fourth one of the year for RBC, as major upheavals to trade policy and other updates out of Washington have strategists up and down Wall Street scrambling to keep up with the market outlook — even as the S & P 500 itself continues to climb to all-time highs. The latest update to 6,250 is essentially where the firm had its year-end target in mid-March, when it was at 6,200. It's higher than where it was in April, when RBC dropped its forecast to 5,550 after incorporating a severe stagflation scenario. However, the market outlook continues to remain uncertain, Calvasina wrote. The strategist expects a wide range of outcomes, citing bullish signals around sentiment that conflict with more pessimistic GDP forecasts. Key to the target change is how RBC is now thinking through the economic outlook, with GDP expected to grow by 1.1% to 2% in both 2025 and 2026. "Investors have been telling us that they are ready to start pricing in 2026," Calvasina wrote. "While it seems early to us to do so, we think it's important to be mindful of this shift in investor focus, and so we've added in a second GDP test that bakes in how stocks perform in years that precede real GDP in the 1.1-2% range." Calvasina also wrote that the firm has "removed any attempt to factor in the political backdrop to our 2025 target," saying attempts to do so no longer seem appropriate, especially as the S & P 500 trades out of step with the president's polling numbers. Still, the new price target is slightly below consensus at 6,280, according to CNBC's market strategist survey . The next highest target is from Bank of America Merrill Lynch's Savita Subramanian, who last week hiked her price objective to 6,300.