On October 11, Caixin Media (Editor Huang Junzhi) reported that the US stock market has been skyrocketing this year, bringing joy to investors. So far this year, the increase has reached 21.87%. $S&P 500 Index (.SPX.US)$ As 2024 approaches its end, investors will undoubtedly start to wonder: Can it continue to rise like this next year?

According to a survey of some top analysts by the consumer financial services company Bankrate, they seem to generally believe that the situation in the next 12 months may not be so optimistic. According to the company's third-quarter Market Expert Survey Report, these professionals expect the US stock market to rise by only 4.1% over the next four quarters, below the long-term annual average of 10%.

Respondents expect that by the end of the third quarter of 2025, the S&P 500 Index will climb from 5,738 points at the end of the survey period to 5,975 points. At the same time, analysts also prefer US stocks over international stocks, believing that value stocks will outperform growth stocks over the same time frame.

Mark Hamrick, Senior Economic Analyst at Bankrate, said: "Due to various uncertainties, we have reasons to be cautious about the outlook. Nevertheless, the resilience of the US economy and the stock market's ability to withstand multiple threats remain extraordinary."

US stocks will no longer be soaring.

Market professionals surveyed by Bankrate expect a more moderate ROI for US stocks in the next 12 months. They project that by the end of the quarter on September 30, 2025, the average target price for the S&P 500 Index will be 5,975 points.

Hamrick said: "Even as the Federal Reserve raises interest rates to the highest levels in years, the performance of major stock indices remains very good. Now that the central bank has begun a loose cycle, the concept of 'not fighting the Fed' should provide some reassurance. But the Fed's mission has nothing to do with keeping the stock market's upward momentum."

Michael K. Farr, President and Chief Executive Officer of Farr, Miller & Washington, said: "It appears that the Fed can avoid an economic downturn, but having great confidence now is premature."

Patrick J. O'Hare, Chief Market Analyst at Briefing.com, commented: "The continuing decline in initial jobless claims continues to provide a hopeful signal for achieving a soft landing, but considering the history of past tightening cycles, it is hard for people to fully believe the Fed can achieve a soft landing."

It is worth noting that top analysts are cautious not only about next year but also the next five years. 42% of respondents believe that the return rate in the next five years will be lower than the long-term average return rate. 33% of respondents believe the return rate will be roughly the same as historical average levels. Only 25% expect the return rate to be higher than historical average.

Valuations are too high.

Some analysts point out that due to already high valuations, they expect lower future return rates.

Sameer Samana, Senior Global Market Strategist at Wells Fargo & Co Investment Research Institute, said: "Given that we are close to historical highs, unless the P/E ratio further expands (which seems unlikely), returns should align with earnings growth, slightly below historical returns."

Chris Fasciano, Senior Portfolio Manager at Commonwealth Financial Network, pointed out: "In terms of valuations, the current starting point is above normal levels, making it more difficult to achieve excess returns."

Others acknowledge the currently high valuations but still expect returns to remain in line with historical levels, and indicate that other factors should boost the stock market.

J. O'Hare said: "We are currently at a high valuation starting point, which should weaken the prospects for returns, but since expected interest rates will be lower, we should be able to achieve total returns consistent with historical averages."

Favoring value stocks

In the past year, growth stocks have to some extent always been the favorites of respondents in such surveys, but this time it is not the case. Value stocks have attracted experts' attention this quarter, as they believe that the performance of value stocks in the next four quarters will outperform other stocks.

Specifically, 42% of respondents prefer value stocks over growth stocks in the next year. 33% believe returns will be roughly the same. 17% of respondents believe growth stocks will outperform value stocks.

Analysts point out, "Value stocks often outperform growth stocks at the beginning of a rate-cutting cycle."

O'Hare said: "Considering the performance gap with growth stocks, value stocks have the greatest prospects for returns in the next 12 months. If the Fed cuts rates because of the sluggish economy, market participants tend to seek the best growth opportunities in a softening environment. However, if economic growth remains stable and rates fall, then value stocks will be the best place for return prospects."

"The third year of a bull market is usually quite challenging," said Sam Stovall, Chief Investment Strategist at CFRA Research. "Investors may be drawn to the safety of value stocks."

Some believe that the performance of value stocks and growth stocks in the current market will be more balanced.

Fasciano predicts: "The magnitude of next year's profit growth will expand. Other relatively inexpensive sectors in the market will begin to show better fundamentals. Therefore, the gap between growth stocks and value stocks should start to narrow."

Horizon Investment Services CEO Chuck Carlson states: "The decline in inflation and interest rates is beneficial for both types of stocks."

Editor / jayden