Skip to main content

Is there much scope for the S&P 500 to build on its gains?

We think there is ample scope for the US stock market to perform strongly in 2024 and 2025. Admittedly, this year’s rally in the S&P 500 hasn’t had much to do with expectations of faster growth in earnings per share (EPS). Instead, it seems mainly to reflect a big drop in the equity risk premium (ERP), which has more than offset a rise in the “risk-free” component of investors’ required real return from equities. Nonetheless, the ERP is not especially low, and we expect the “risk-free” component to drop back. Expected EPS may also hold up better than we had once thought, as a recession now looks more doubtful.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access