S&P 500: A Decade of Growth and What’s Next in 2025

S&P 500 and SPY in 2025: A Data-Driven Outlook

The S&P 500 has been the go-to benchmark for investors tracking market performance. With a decade of data behind us and forecasts shaping expectations for 2025, let’s dive into historical trends and expert predictions to see what the future might hold.

Looking Back: S&P 500 Performance Over the Last 10 Years

The past decade has been a rollercoaster ride for the S&P 500, featuring massive rallies, market corrections, and a global pandemic-induced dip. Here’s a snapshot of how the index performed year by year:

• 2015: –0.7%

• 2016: +9.5%

• 2017: +19.4%

• 2018: –6.2%

• 2019: +28.9%

• 2020: +16.3%

• 2021: +26.9%

• 2022: –19.4%

• 2023: +24.2%

• 2024: +23.3%

What’s the Average Annual Return?

If you take the arithmetic average, the S&P 500 has delivered an annual return of about 12% over the last 10 years (excluding dividends). The compound annual growth rate (CAGR), which accounts for ups and downs, is slightly lower at around 11%.

Where Are We Now? The State of $SPY in 2025

So far, $SPY is down -5.67% YTD (as of March 13, 2025). Market fluctuations, macroeconomic uncertainties, and interest rate policies are key factors affecting performance. But what does the rest of the year hold?

Forecasts for 2025: What the Experts Say

Market analysts have differing views on where the S&P 500—and by extension, $SPY—is headed in 2025:

Wall Street’s Consensus

Market strategists generally expect the S&P 500 to rise around 10% in 2025, slightly below the 10-year average but still a healthy gain.

Goldman Sachs’ Prediction

Goldman Sachs estimates the S&P 500 will hit 6,500 by year-end 2025, representing a 10% increase from 2024 levels. They cite stable economic conditions and steady earnings growth as key drivers.

The Bullish Take: Ed Yardeni’s Optimism

Some strategists, like Ed Yardeni, are even more optimistic. He believes the index could reach 7,000, which would mean an 18% increase for 2025. If this scenario plays out, it would outperform the historical average.

The Bearish Perspective

Not everyone is optimistic. Some experts warn of market overheating and the potential for a downturn. John Hussman, for instance, has expressed concerns that current valuations resemble those seen in past speculative bubbles. In his view, a significant correction is possible.

Comparing 2025 Performance: YTD vs. Forecasts

A visual look at how 2025 is shaping up compared to history and forecasts:

• 2024 Performance: +23.3% ✅

• YTD 2025 (March 13): -5.67% ❌

• EoY 2025 Forecast: +10% (Consensus) 📊

While the year started on a negative note, analysts expect a rebound by year-end, aligning with long-term market trends.

How Does 2025 Compare to the Last Decade?

Historically, the S&P 500 has delivered around 12% per year in returns. With 2025 forecasts ranging from 5% to 15%, it appears the market could continue on a similar trajectory—though perhaps at a slightly slower pace than recent boom years like 2019 and 2021.

What Investors Should Watch

• Interest Rates & Inflation: Any policy shifts by the Federal Reserve could impact equity markets.

• Earnings Growth: Corporate earnings will be a key driver of market direction.

• Geopolitical & Economic Factors: Global instability or unexpected recessions could alter forecasts.

Final Thoughts

Despite a weak start in 2025, historical performance and expert forecasts suggest potential for a year-end recovery. The S&P 500’s long-term track record remains strong, and patience could be key for investors navigating market turbulence.