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HSBC has lifted its year-end forecast for the S&P 500 index to 6,500, up from the earlier target of 6,400. The bank credited strong earnings from the technology and financial sectors, along with stable economic conditions, for the upward revision.
Second-quarter results showed earnings per share for S&P 500 companies rising by 12%. This marked the third quarter in a row of double-digit growth. Leading tech firms, often called the “Magnificent 7,” posted the strongest results, while financial companies also performed well.
HSBC said investment in artificial intelligence continues to play a big role. Major tech companies are spending heavily on AI, which has become a key driver of growth and confidence in the market. The report also noted that tariffs, which many feared would hurt corporate earnings, have so far had only a small impact.
The new target of 6,500 points signals a modest gain of about 1.5% from recent levels. It reflects cautious optimism, as the bank also pointed to risks ahead. HSBC expects slower US economic growth in the second half of 2025. This slowdown may push the Federal Reserve to cut interest rates, which could support stocks.
HSBC also shared possible scenarios. In the most hopeful case, the S&P 500 could rise as high as 7,000 by the end of the year if AI adoption keeps accelerating and profit margins improve further. On the other hand, a sharp rise in tariffs, higher inflation, or limited rate cuts could pull the index down toward 5,700.
Markets have already been trading close to record highs. The S&P 500 recently crossed the 6,500 mark, showing strong momentum despite global trade uncertainties. With earnings growth, AI-driven investment, and financial strength still pushing the market higher, investor sentiment remains positive.
HSBC’s view highlights how technology and finance continue to set the pace for Wall Street. AI spending in particular has become one of the most important themes, supporting valuations without creating excess pressure. At the same time, the small impact of tariffs has helped reduce concerns that trade disputes could derail the rally.
Overall, HSBC’s raised S&P 500 forecast shows confidence in U.S. equities for the rest of 2025. Strong tech earnings, ongoing AI investment, and steady financial performance are expected to keep the index supported, even as economic growth slows.
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