Why These Market Forecasters Expect Stocks To End the Year at Record Highs

Some Wall Street forecasters see stocks closing out 2025 at record highs—despite a shaky start to the year.

Deutsche Bank analysts led by Chief US Equity & Global Strategist Binky Chadha on Tuesday raised their year-end S&P 500 target to 6,550, a number suggesting about 10% upside from Tuesday’s close. That would be nearly 7% above the index’s record close from earlier this year.

Investor positioning, they said, is close to neutral and assumes tariffs will be a slight drag on earnings growth this year. “However, if there is confidence that tariff impacts will be modest and temporary, we expect discretionary investors to look through any slowing in growth and turn overweight in anticipation of a rebound,” they wrote. 

The analysts expect robust corporate demand to shrink the supply of stock on public markets. They forecast companies will spend $1.1 trillion on stock buybacks this year, thanks to resilient earnings. 

Deutsche Bank raised its estimate of the S&P 500’s aggregate full-year earnings per share to $267 from $240. The firm entered the year forecasting index-level earnings of $282 per share. But it slashed that outlook in mid-April shortly after President Trump paused “Liberation Day” tariffs for 90 days and lifted rates on Chinese goods to 145% at a minimum. Earnings, they estimated, would suffer from a prohibitively high effective tariff rate and the lingering possibility of a prolonged trade war. 

The outlook improved last month when the U.S. and China agreed to slash their respective tariff rates while officials negotiated a more comprehensive trade deal. Tensions between the world’s two largest economies linger: This weekend each party accusing the other of violating their tentative agreement. 

Still, the White House’s approach to tariff negotiations has some market watchers feeling optimistic. Deutsche Bank’s analysts take the White House’s decision to pause “Liberation Day” tariffs just hours after they took effect, “before the emergence of any legal barriers or economic or political pain,” as a sign that “if negative impacts of tariffs do materialize, we will get further relents.”

As such, Deutsche Bank expects this year’s rally to 6,550 to benefit investors who bet on Trump relenting. “Despite the rhetoric to the contrary, the 2018-2019 dynamic of repeated cycles of escalation and de-escalation predicated on the market looks to be alive and well.”