The S&P 500 has gained about 9.93% year to date, but this figure doesn’t fully capture the broader market’s performance in 2025. The year has been marked by volatility, with August reflecting a similar pattern.
While the index advanced 3.2% during the month, the index experienced notable swings throughout the month. However, resilient earnings, a supportive macro backdrop, and Fed Chair Powell’s signal of potential rate cuts starting in September paint an optimistic picture for the U.S. economy, easing concerns about its overall health.
Amid improving market sentiment, Jefferies, UBS, Citigroup and HSBC recently revised their S&P 500 forecasts upward, indicating the economy’s upbeat outlook.
Jefferies Raises S&P 500 Annual Target on Resilient Earnings
According to Reuters, Jefferies lifted its year-end target for the S&P 500 index to 6,600 from 5,600, on the back of strong second-quarter corporate earnings. Jefferies also projects the S&P 500 EPS to rise by around 10% this year, highlighting expectations for strong profit growth.
Per LSEG data, as quoted on Reuters, as of last Friday, 80% of the 474 S&P 500 companies that had reported second-quarter earnings beat analysts’ expectations. That’s above the prior four-quarter average of 76.4% and well ahead of the historical average of 67%.
UBS Lifts Projections for Second Time in Two Months
Citing confidence in robust corporate earnings, easing trade tensions and anticipated interest-rate cuts, UBS Global Wealth Management raised its year-end S&P 500 target to 6,600 from 6,200, marking its second upgrade in just two months, according to Reuters.
Earlier in the month, Citigroup strategists also raised their year-end S&P 500 target to 6,600 from the previously projected 6,300, citing tax cuts to offset the effects of tariffs on U.S. businesses, according to Yahoo Finance. Strategists at Citigroup also project the broad market index to reach 6,900 by the middle of next year.
Tom Lee Sees S&P 500 Hitting 7,000
Fundstrat strategist, Tom Lee, raised his S&P 500 year-end forecast to 6,600, provided two key conditions fall into place: a dovish Fed and a recovery in the Institute for Supply Management manufacturing index, as quoted on MSN.
Fed Chair Jerome Powell, at the Jackson Hole symposium last Friday, signaled that an interest rate cut could be on the table at next month’s meeting. Per the CME FedWatch tool, markets are anticipating an 88.2% likelihood of a rate cut in September, marking an increase from 75% before Powell’s Jackson Hole speech.
Markets also estimate a 94.2% likelihood of a rate cut in October and a 99% likelihood of a rate cut in December, according to the CME FedWatch tool.
ETFs to Explore
Below, we highlight funds tracking the S&P 500 for investors to increase exposure to and capitalise on the optimistic outlook for U.S. markets.
However, the path ahead may not be smooth, and volatility can be expected in the short term. Still, the index is likely to follow an upward trend. Investors are advised to maintain a long-term perspective and avoid reacting to short-term swings.
Investors can consider Vanguard S&P 500 ETF VOO, SPDR S&P 500 ETF Trust SPY, iShares Core S&P 500 ETF IVV and SPDR Portfolio S&P 500 ETF SPLG.
VOO, SPY and IVV are among the largest funds in the United States, with VOO having the largest asset base of $735.54 billion, followed by IVV and SPY, with an asset base of $661.68 billion and $654.64 billion, respectively.
SPLG is the cheapest option and more suitable for long-term investing, charging 0.02% and sporting a Zacks ETF Rank #1 (Strong Buy). With a one-month average trading volume of about 70.19 million shares, SPY is the most liquid option, offering investors easier entry and exit while minimizing the risk of significant price fluctuations, ideal for active trading strategies.
Equal-Weighted ETFs
Investors seeking broad market exposure with a comparatively lower risk profile may consider equal-weighted funds. These funds offer sector-level diversification by assigning equal weight to each constituent stock, regardless of market capitalization, reducing concentration risk.
This makes them a relevant choice for investors seeking diversified exposure across sectors. The S&P 500 Equal Weight Index has gained 7.78% over the past year and 2.28% month to date, outpacing the broader S&P 500 index month to date.
Invesco S&P 500 Equal Weight ETF RSP, ALPS Equal Sector Weight ETF EQL and Invesco S&P 100 Equal Weight ETF EQWL are some good options.
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SPDR S&P 500 ETF (SPY): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
Invesco S&P 500 Equal Weight ETF (RSP): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
Invesco S&P 100 Equal Weight ETF (EQWL): ETF Research Reports
ALPS Equal Sector Weight ETF (EQL): ETF Research Reports
SPDR Portfolio S&P 500 ETF (SPLG): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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