According to the report, 2024 was an exceptional year for stocks, with the S&P 500 returning 23.3% — marking “the first time we saw consecutive years with 20% plus returns since the 1990s.”
Looking ahead, expectations are for more modest returns in 2025.
“Market participants are 8-10% optimistic about the equities market this year — not another 20% optimistic,” it said, noting that this would be closer to the historical average returns of 8% for the S&P 500 since 1928.
While almost two thirds of respondents (65.1%) said they expect modest gains in the S&P 500, the survey also found that almost one quarter, 23.3%, see the index declining a bit this year, and 11.6% expect markets to stay flat.
The survey also indicated that market volatility is expected to remain steady, and equity and options trading volumes are expected to increase, as is retail investor participation in both equity and options trading.
The top downside risk to the outlook was seen as growing geopolitical tensions, followed by a resurgence in inflation and its impact on monetary policy, driven by shifting U.S. trade policy.
“On the downside, tariffs and potential trade wars could reignite inflation and therefore pause rate cuts or, worse, force the Fed to reverse course and raise rates,” the report said.
At the same time, the survey found that 68.3% of respondents said that they are “very or extremely worried” about U.S. debt levels.
Potential upside risks include a more business-friendly approach to tax policy and regulation, which could boost corporate profits and stock prices.
“Additionally, respondents noted that tariffs coming in lighter than expected — and therefore less or not inflationary — would benefit markets,” it said.
For the financial industry in particular, SIFMA said that survey respondents were most concerned about cyberattacks, with 75.6% saying that they are “very or extremely worried” about hackers.