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Investing.com -- RBC Capital revealed in a note to clients on Monday that it has revised its year-end 2025 S&P 500 target to 5,730, up from 5,550, but warned that the index is still likely to decline from current levels.
“We expect the path of stocks to be choppy through year-end,” RBC analysts wrote, citing a wide range of potential outcomes and growing downside risks.
Despite the target upgrade, RBC stressed that “our sentiment model... is signaling less robust forward returns” and warned that “a move to +1 standard deviations above the long-term average has been a reliable signal that the stock market is due for a significant pullback.”
RBC sees a broad range of possible outcomes by year-end, from a bull case of 6,400 to a bear case as low as 4,200-4,500. “The wide gap highlights the high degree of uncertainty and fog in the outlook,” the firm said.
RBC’s models factor in inflation in the upper 2% range, three Federal Reserve cuts starting in September, and real GDP growth of 1.3% for the year. But the firm warned that rising 10-year yields or disappointing economic data could shift sentiment rapidly.
The firm also highlighted weakening interest from non-U.S. investors. “Tariffs opened a door – an openness to investing in other geographies – that had been closed for quite some time,” analysts noted.
Overall, RBC described its stance as “rather neutral,” emphasizing that “current pricing in the S&P 500 already reflects the step-up improvement in macro fundamentals.” Still, risks including policy uncertainty and weaker consumer sentiment could drive a correction before year-end.