As the U.S. heads into the Thanksgiving holiday, markets are riding a wave of optimism that could extend into the final stretch of 2025. The Dow Jones, S&P 500 (SPX), and Nasdaq 100 (NDX) all posted gains in the days leading up to Thanksgiving. Historically, Thanksgiving week has often delivered modest rallies, and this year investors are hoping seasonal cheer will help sustain momentum.
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Seasonal patterns, corporate earnings growth estimates, and expectations of a Federal Reserve interest rate cut in early 2026 are giving bulls confidence. However, some remain cautious about high valuations, rising volatility, and potential changes in Fed policy.
Analysts Share Their Forecasts for the Year-End Rally
- Ohsung Kwon, chief equity strategist at Wells Fargo (WFC), expects the rally to broaden across sectors, projecting the S&P 500 to reach 7,100 by year-end, up from 6,819.56 currently. He highlighted five catalysts driving the move, including positive seasonals, tariff reversals, stimulus from the “Big Beautiful Bill”, strong corporate earnings, and the end of the government shutdown.
- Deutsche Bank (DB) lifted its year-end target for the S&P 500 to 7,000 from 6,550, citing stronger corporate earnings and resilient U.S. economic growth. Analyst Binky Chadha noted that equity valuations are likely to remain elevated, supported by higher payout ratios and a stronger earnings growth trend.
- Barclays (BCS) also raised its S&P 500 target to 6,450 from 6,050 last month. Strategists pointed to solid corporate earnings and stabilizing global GDP growth as reasons for optimism, while cautioning that U.S. labor market risks are worsening. Their target suggests the index could end the year just below current levels, reflecting both optimism about AI and concerns about President Trump’s tariffs on the economy and corporate profits.
Holiday Spending Could be a Catalyst
Looking ahead, consumer spending could provide a tailwind. Analysts expect record-breaking holiday sales, with Adobe Analytics projecting a 5.3% boost over 2024 and the National Retail Federation forecasting total holiday sales topping $1 trillion for the first time.
Early holiday shopping data might influence investor sentiment and provide clues about consumer resilience.
Overall, Thanksgiving cheer may give markets a short-term lift, but analysts caution that valuation risks, inflation pressures, and policy uncertainty could temper gains.
Is the SPDR S&P 500 ETF Trust a Buy?
The SPDR S&P 500 ETF Trust (SPY) currently has a Moderate Buy rating among 504 Wall Street analysts. That rating is based on 416 Buy, 81 Hold, and seven Sell recommendations issued in the last three months. The average SPY price target of $782.22 implies 14.99% upside from current levels.
