Historic Winning Streak Over for S&P 500 ETFs

S&P 500 ETFs, like the $622 billion Vanguard S&P 500 ETF (VOO), reached a historic milestone Friday, recording a nine-day winning streak. However, that streak ended Monday with the index closing mildly lower.  

This marks its longest consecutive daily gain since November 2004, a span of over two decades. 

This rally effectively erased the losses incurred in early April, which were triggered by President Donald Trump's announcement of sweeping tariffs on major trading partners.  

The market's recovery was bolstered by a stronger-than-expected April jobs report, revealing the addition of 177,000 jobs, surpassing forecasts for a reading of 135,000. Additionally, there is growing optimism that the Trump administration might soften its stance on tariffs. 

Despite this positive momentum, the S&P 500 remains nearly 8% below its all-time high from February. Investors are now closely monitoring this week’s Federal Reserve policy decisions and the potential resumption of tariffs in July, factors that will impact future market performance. 

Analyst Expectations for the S&P 500 in 2025 

Major financial institutions forecast the S&P 500 to end 2025 with single-digit gains. Morgan Stanley anticipates a "pause year," suggesting the index may deliver modest returns as the bull market matures.  

Goldman Sachs projects the S&P 500 will reach 6,200 by year-end, implying a 9% price gain and a 10% total return from Monday’s close.  

Factors That Could Drive the Market Higher

Several elements could support further gains in the S&P 500 and related ETFs like VOO. 

• Corporate earnings growth: If corporate earnings exceed analysts' expectations, the S&P 500’s upward trajectory can continue, assuming other factors are in place.  
• Interest rate environment: The Federal Reserve's anticipated rate cuts could support higher stock valuations, providing a potential safety net for market stability. 
• Capital inflows: A substantial $7 trillion currently sits in money market funds, according to the Investment Company Institute. As yields decrease, investors may seek higher returns in the stock market, potentially supporting stock prices.  

Risks That Could Pressure U.S. Stocks

Despite potential upsides, several risks could exert downward pressure on the market.

• Trade policy uncertainty: The Trump administration's tariff policies have introduced significant uncertainty. While some tariffs have been delayed or exempted, the overall trade environment remains volatile, potentially impacting economic growth.  
• Economic slowdown: The U.S. GDP contracted by 0.3% in the first quarter of 2025, raising concerns about a potential recession.  
• Federal Reserve policy: Despite calls for rate cuts, the Federal Reserve remains cautious due to inflationary risks from new tariffs and other factors. This stance may disappoint investors hoping for more accommodative monetary policy.  
• Global market dynamics: International stocks have outperformed U.S. equities in 2025, with the iShares MSCI EAFE ETF (EFA) rallying 14% compared to the S&P 500’s 3% decline.  

While the S&P 500 may achieve modest gains by the end of 2025, investors should remain vigilant amid ongoing economic uncertainties and market volatility. Diversification and a focus on quality investments may help navigate the complex landscape ahead.