Will the S&P 500 continue to rise after hitting new highs

In the summer of 2025, the S&P 500 index reached new all-time highs, holding steady above the 6,300-point mark. The market shows strong momentum driven by corporate earnings growth, stable U.S. macroeconomic data, and expectations of monetary easing. At the same time, signs of overheating are beginning to appear — including elevated valuation multiples and a narrow base of market leadership.

Factors supporting further growth

As of mid-August 2025, the S&P 500 has gained more than 12% since the beginning of the year. The key drivers of this rally are the tech sector — particularly companies leveraging artificial intelligence — and stabilizing inflation, which has led market participants to anticipate a rate cut from the Federal Reserve as early as September.

Strong Q2 earnings reports also provide a tailwind. Most companies have exceeded analysts’ expectations, and the index’s year-over-year EPS growth is approaching 10%, one of the best results in the past three years.

Experts highlight the following factors as key to potential further gains:

• Corporate earnings growth. Double-digit EPS growth is expected for 2025, particularly in high-tech and industrial sectors.
• Monetary policy easing. The Fed may cut rates by 25 basis points in September, with at least one more cut likely by year-end.
• Investor interest in artificial intelligence. Over 35% of S&P 500 company profits are now directly linked to AI or automation.
• Resilient U.S. consumer demand. Retail sales continue to rise despite moderate inflation, supporting revenue in consumer-related sectors.
• Weak dollar. A softer dollar boosts U.S. exports and strengthens the performance of multinational companies in the index.

Together, these factors form a base for moderate growth through mid-2026, with a potential target range of 6,700–7,200 points.

Possible threats and correction risks

Despite the optimistic backdrop, short-term volatility remains a real risk. One of the main concerns is the high concentration of gains in a small group of companies. The top 10 firms now account for a record 36% of the S&P 500’s market cap, making the index vulnerable if just one or two major players falter. Additional risks include:

• Geopolitical instability in Asia and the Middle East;
• Rising trade tensions between the U.S. and China;
• Global growth slowdown, particularly in Europe and Japan;
• Overly optimistic rate cut expectations — if the Fed moves more cautiously, markets may be disappointed.

It’s also worth noting that the index is trading at a price-to-earnings ratio above 22 — higher than the historical average. This suggests that much of the positive outlook is already priced in, and any deviation from the optimistic scenario could trigger a swift market revaluation.

What’s next

Analysts forecast that the index could rise another 3–5% by the end of 2025, especially if the first Fed rate cut materializes. However, increased volatility is likely in the second half of the year, as investors closely watch macroeconomic data, central bank commentary, and corporate earnings.

A scenario of moderate growth remains the base case, but investors should stay disciplined, avoid overconcentration in select stocks, and view market corrections as opportunities to buy high-quality assets at more attractive valuations