The S&P 500 Index had a strong performance in 2025 as it jumped by over 16% from January and by ~41% from its lowest point in April when Donald Trump announced his reciprocal tariffs. This article explores why analysts anticipate more gains this year and why the SPYM is a better buy than the popular SPY and VOO ETFs.
Why Wall Street pros are bullish on the S&P 500 Index
Most analysts are highly bullish on the S&P 500 Index this year, with Oppenheimer being the most optimistic with a target of $8,100.
The other most bullish analysts are from Deutsche Bank and Capital Economics, who believe that it will jump from the current $6,845 to the psychological level at $8,000.
Morgan Stanley and Wells Fargo analysts see the index rising to $7,800, while other companies like RBC Capital Markets, Evercore, Yardeni Research, FundStrat, and Goldman Sachs believe that the index will continue rising to over $7,500.
Wall Street 2026 Year End Target For S&P 500👇 Oppenheimer: 8,100 Deutsche Bank: 8,000 Capital Economics: 8,000 Morgan Stanley: 7,800 Wells Fargo: 7,800 RBC Capital Markets: 7,750 Evercore ISI: 7,750 Yardeni Research: 7,700 Fundstrat: 7,700 Citigroup: 7,700 Goldman
There are a few potential catalysts for the S&P 500 Index this year. One of the most important one is that the largest private companies like OpenAI, Anthropic, and SpaceX will launch their initial public offerings (IPO) this year, a move that may stimulate more listings.
The other bullish catalyst is that the Federal Reserve is expected to continue cutting interest rates later this year, a move that will make equities more attractive to government bonds. Indeed, the index jumped last year as the bank delivered three cuts.
Corporate earnings are also expected to be strong this year, continuing a trend that has been going on in the past few quarters. Recent data showed that companies in the S&P 500 Index recorded double digit growth rate for four consecutive quarters.
The odds of high earnings have jumped recently as macro data showed that the US economy returned to growth, with the GDP expanding by 4.3% in the third quarter. Also, companies will benefit from Donald Trump’s Big Beautiful Bill, which largely takes effect this year.
Analysts also expect that the AI boom will accelerate this year, with companies like Nvidia and Broadcom leading the charge. This rebound will help to invalidate ongoing fears that the AI bubble will burst.
Why SPYM ETF is better than VOO and SPY
The best approach to take advantage of the potential S&P 500 Index is to invest in exchange-traded funds (ETF) tracking it.
Most market participants have opted to Vanguard S&P 500 Index ETF (VOO), which had over $137 billion in inflows in the last 12 months, bringing its assets to over $839 billion in assets under management. It is followed by the iShares Core S&P 500 ETF (IVV) and SPDR S&P 500 ETF (SPY) with over $766 billion and $717 billion, respectively.
Still, the smaller State Street SPDR Portfolio S&P 500 ETF (SPYM), which has over $97 billion in assets, is a slightly better fund than VOO, VOO, and SPY.
The main reason is that the fund has a smaller expense ratio than the others even though it tracks the same index. It has an expense ratio of 0.02%, lower than SPY’s 0.09%. It is also lower than IVV’s and VOO’s 0.03%.
The spread between these funds is not big. However, experts always recommend investing in a cheaper fund when it is tracking similar assets, as the fee difference can add up.
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