The S&P 500 is expected to moderate in 2025 after two years of exceptional gains, as historical trends suggest reduced momentum following significant rallies. Analysts at Oppenheimer highlight that cumulative returns exceeding 40% over two years typically result in subdued performance, with an average annual return of 3.7% and positive outcomes in only half of such cases.
The S&P 500 is 27 months into a bull market, approaching the median 32-month duration seen since 1932. While this doesn’t signal an imminent end, it suggests a phase of stabilization. Performance studies indicate that returns following all-time highs, like those in 2024, often drop to 1-2% in the following 12-24 months, below the historical average of 9-10%.
Oppenheimer projects a balanced 6% return for 2025, with the S&P 500 potentially reaching 6,400, within a range of 6,000 (bearish) to 6,700 (bullish). They foresee corrections and consolidations rather than dramatic declines, with typical positive-year drawdowns averaging 11% over nine weeks. This reflects optimism for sustained growth tempered by caution around historical performance patterns.