21 April 2025 - 1:00pm
What a difference a few months makes. Wall Street rang in 2025 with a rapturous chorus, convinced that the tax-cutting, deregulating Trump administration would keep the stock market on the record roll it’s been on for years. In January, the average year-end target the big financial houses set for the S&P 500 stood at over 6,500, which would have made for another 11% gain in share values this year. At that rate, America’s wealth would double every six or seven years.
Now, less than four months later, they’ve downgraded that average to just over 6,000 — a 14% rise from where things currently stand, but still a trifling 2% rise for the year.
Main Street investors haven’t yet received the memos, or have simply chosen to ignore the expert opinion. While foreign funds and institutional investors are selling or holding, retail investors are eagerly buying the dips, seemingly trusting the administration’s narrative that the market decline is temporary and will rebound once the President’s tariffs take effect.
That dichotomy tees up a potential clash later this year. Either Wall Street gets this wrong, the market bounces back amid an American renaissance, and the shift of emphasis away from Wall Street to Main Street, which has become a recent leitmotif of the administration’s messaging is real. Or, the experts are right, the MAGA faithful get their fingers burned, and the pitchforks come back out.
Intuitively, one would tend to trust those who make their living off predicting the stock market’s movements to have taken the time to carefully assess the possibilities. But given that the dramatic change in their predictions and the very wide range of them — the targets range from less than 4,500 to as high as 7,000 — the old adage that expert prediction is no more accurate than a dart-throwing monkey has seldom seemed more true. On the face of it, this seems little more than guesswork.
And to a considerable degree, it is. Much now depends on the President’s decisions — from tariffs and court rulings to his stance on the Fed and antitrust enforcement. The targets, then, carry little weight.
They’re still useful, though, because they reflect the present state of gloom among institutional investors, some of which seem justified. The euphoria of the early new year was always questionable. The American boom of the last decade had been driven by a huge run-up in debt, which had created an unsustainable situation. Then early in the new year DeepSeek punctured the myth of “American exceptionalism” that had powered recent surges in the Magnificent Seven tech stocks. Having driven the US market to soaring heights last year, as it sucked in investment from around the world, the Magnificent Seven have now fallen sharply, down by an average of a fifth since the new year.
In contrast Europe and China, which had been in a slump until this year, have suddenly switched to the sort of aggressive fiscal stimulus recently seen in America. With American exceptionalism fading and new enthusiasm for other markets, the US now looks like last season’s fashion. So wherever the market ends up this year, the one safe bet would probably be that the great American bull market of the last 15 years is now over. The big opportunities lie elsewhere.
John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a Religion (Simon & Schuster, 2017).
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