(Reuters) – Brokerage HSBC stated on Friday it expects the to hit 6,700 by the tip of 2025, on the again of sturdy company earnings progress and a resilient U.S. economic system.

The brokerage’s present forecast implies an upside of about 10.3% to the index’s final shut of 6,075.11.

“We expect next year’s equity returns to be focused on earnings growth as valuations are more stretched,” HSBC analysts led by Nicole Inui wrote in a word. “Overall, we expect earnings to grow by 9% incorporating a slower but still resilient U.S. economy and some margin expansion.”

The benchmark index has had a superb run this 12 months, having gained shut to twenty-eight% up to now, broadly boosted by the so-called ‘Magnificent 7’ shares on the synthetic intelligence growth.

A resilient macro-economic backdrop, continued earnings progress and gradual easing in inflation additionally additional supported the index.

The sequence and timing of the U.S. Federal Reserve’s financial coverage modifications, inflation ranges and elevated valuations can be key subjects for the fairness market going into 2025, HSBC stated.

The brokerage projected the Fed to chop by an extra 125 foundation factors (bps) by finish of 2025 that features a 25 bps reduce this month.