On December 1, 2025, the S&P 500 closed at 6,812.63, yet some strategists say the benchmark may still have meaningful room to run. Tom Lee of Fundstrat Global Advisors now argues the index could climb into a range of 7,200 to 7,300 by December 2025, framing the pullback in November as a setup rather than a ceiling.
His outlook leans heavily on a shift in U.S. monetary policy. On October 29, 2025, the Federal Open Market Committee said it would stop reducing its securities portfolio on December 1, effectively ending quantitative tightening and freezing the size of the balance sheet, a move detailed in the Fed’s policy normalization materials and seen by many as a fresh liquidity tailwind for risk assets.
Liquidity tailwinds and market math
From the December 1, 2025 close, Lee’s upper target implies a gain of roughly 7 percent in a single month for the large-cap benchmark. He contends that renewed central bank support, improving manufacturing data and still-elevated cash holdings on the sidelines could coax more investors back into equities as year-end performance pressure intensifies.
The change in Federal Reserve policy is central to that case. By halting balance sheet runoff while also cutting interest rates, policymakers are signaling greater concern about funding stresses and slowing growth than about inflation. That combination tends to support higher equity valuations, especially in rate-sensitive sectors such as technology and small caps, even as it raises questions about how late in the cycle the current expansion has moved.
Risks facing late-cycle bulls
Not all forecasts share Lee’s conviction. Some major banks now place their official targets nearer 6,200 for the end of 2025, while others see the index pushing toward 7,500 only by the end of the year.
The gap between those targets underlines how finely balanced the outlook has become. Bulls argue that easier policy, solid earnings growth and a potential crypto rebound could extend the cycle, while skeptics point to still-elevated valuations, policy uncertainty and the risk that tighter financial conditions return.
For investors, the divergence in views means late-2025 positioning is likely to hinge less on a single year-end number and more on how much volatility they are prepared to tolerate along the way.
