Investors are set for a bountiful Christmas stocking this holiday season. The S&P 500—the key U.S. stock benchmark—is up over 27% in 2024, setting more than 50 record highs along the way.
But will this bull market charge ahead under Donald Trump’s second presidency?
Wall Street’s major banks seem to think so, but one notable contrarian who nailed the 2024 melt-up has a very different outlook.
Market strategist Mark Hunter predicts a painful 12-month transition for the S&P 500. He’s warning of a staggering 65% to 80% crash, describing it as part of a looming “global deflationary bust.”
Wall Street: S&P 500 bull market to continue
Major banks are forecasting another strong year for the S&P 500, with most predicting gains of 7% to 15% by the end of 2025. That would mean fresh record highs for the benchmark index.
Goldman Sachs and JPMorgan are on the lower end of the range, projecting a year-end price target of 6,500 for the S&P 500—about 7% above current levels.
Goldman’s optimism is rooted in the strength of the U.S. economy and robust earnings growth, particularly from the “magnificent seven” stocks like Apple and Nvidia.
JPMorgan expects the “polarized regional market performances” of 2024 to persist, with the Trump administration’s heavier tariffs favoring U.S. stocks. This year, U.S. equities outperformed global peers by a remarkable 22%.
Global investors are also leaning into Wall Street. Foreign portfolios held $13.7 trillion in U.S. stocks in 2023, a number likely higher now after the recent rally.
UBS Global Wealth Management’s Jason Draho believes Trump’s reelection “pulled forward” some returns for the S&P 500. He targets 6,600 by year-end 2025, a view Barclays shares, citing a strong economy and Big Tech earnings.
Bank of America is slightly more bullish, setting its 2025 target at 6,666—an almost 10% gain—driven by lower interest rates and a resilient job market.
However, strategist Savita Subramanian advises looking beyond the index, noting that “the average stock is more attractive than the overall S&P 500.”
Deutsche Bank takes the most optimistic stance, with U.S. equity strategist Bankim Chadha forecasting a 15% jump to 7,000.
Chadha points to a “historically strong economic backdrop,” with low unemployment and robust GDP growth reminiscent of the 1960s and 1990s—periods of strong equity performance.
Even independent firm Yardeni Research echoes Deutsche Bank, projecting the S&P 500 to hit 7,000. “Trump 2.0 represents a major regime change that’s bullish for the economy and stocks,” it said.
Despite the consensus optimism, some remain skeptical that the rally can sustain itself indefinitely.
Not so fast— 2025 could mark bursting of “everything bubble”
David Hunter—Chief Market Strategist at Contrarian Macro Advisors—predicted the S&P 500’s current rally long before it became a mainstream view.
In early 2022, during the worst year for U.S. stocks since the Global Financial Crisis, Hunter boldly forecasted that the S&P 500 would hit 6,000 in a historic “melt-up” rally—even as the index sat below 4,400.
Hunter has since upped his target to as high as 7,000, but his broader outlook remains unchanged: the melt-up will give way to a catastrophic downturn, likened to “the pandemic on steroids.”
He anticipates 2025 as the year when the equity bubble bursts, triggering a “global deflationary bust” that could send stocks plummeting by 65% to 80%.
“The global bust refers to the economy and the financial system,” Hunter said in a recent interview. “But it will be accompanied by a U.S. bear market with an 80% peak-to-trough decline.”
At the heart of the problem, Hunter argues, is excessive debt in the global financial system—a precarious “house of cards” vulnerable to fluctuations in interest rates and liquidity.
He contends this fragility worsened in 2022 and 2023, when central banks allowed inflation to spiral out of control.
Although inflation is easing, Hunter believes it will linger longer than expected, complicating the Fed’s plans to keep lowering interest rates. Without ultra-low rates and relentless money printing, the stock market’s primary growth engines are fading.
Hunter also sees the end of a secular bull market that began in 1982.
While secular bull markets can experience setbacks like 2008 or 2022, they are characterized by decades-long upward trends driven by factors such as low interest rates, favorable economic conditions, and robust corporate earnings.
He warns that this era is closing, ushering in a prolonged bear market marked by high inflation and weak economic growth.
Hunter foresees a multi-year downtrend that could erase much of Americans’ wealth, with the market signaling trouble long before most realize it.
“The markets will have already started going down before you know it’s real trouble,” he explained. “You’ll think it’s a pullback, but it’ll become a bigger rollover. The first step down from wherever it tops out could be 30 or 40%.”
He predicts the final leg of the downturn will start after the Fed intervenes—but by then, it’ll be too late.
Who's right?
It’s worth reiterating that Hunter’s view of the U.S. stock market and economy is a minority perspective, one that’s clearly not shared by the major banks.
That said, Wall Street didn’t recognize the U.S. was in a recession in 2008. Most were blindsided when Bear Stearns collapsed in March of that year, a prelude to the financial crisis.
Groupthink doesn’t always lead to the right conclusion, especially in markets.
Wall Street appears confident that a second Trump presidency will usher the stock market to new highs. For Hunter, however, a populist president may delay the inevitable, but he won’t prevent the looming crash.