Bank of America believes the stock market could see another solid year with double-digit returns, and certain sectors are poised to enjoy outsized gains. The Wall Street firm set its 2025 S & P 500 target at 6,666, which implies an 11% upside from current levels. While the firm expects the broad benchmark to continue to climb, it said buying opportunities lie in individual companies that have the potential to return cash to shareholders and are beneficiaries from the new administration.
The firm expects bank stocks to benefit from a return in merger and acquisition activities as well as optimism around deregulation under a Donald Trump administration. Meanwhile, real wage growth, a possible outcome from the president-elect's protectionist policies, is a positive for discretionary spending, the bank said.