Wall Street analysts warn of possible decade-long US stock market stagnation

A concerning prediction is gaining traction among Wall Street analysts: the US stock market, after years of impressive gains, might deliver essentially flat returns throughout the coming decade. This notion seems counterintuitive amid the ongoing bull market, which is part of a larger secular rally stretching back nearly 15 years and that saw the S&P 500 and Dow Jones hit new records just recently. However, an increasing number of forecasters are raising the possibility that the rally may soon stall. They identify two primary factors that could restrain the market: elevated valuations and consecutive years of double-digit growth in the benchmark index. Bank of America's equity strategists project the S&P 500 could decline by 0.1% over the next ten years, a significant underperformance compared to its historical average annual gain of 10.5% since the 1950s. The bank noted that historical patterns show lower average returns following periods of high growth, suggesting investors may need positive surprises in GDP and earnings to avoid a seventh 'lost decade.' Similarly, Apollo's chief economist Torsten Sløk expects the S&P 500 to remain relatively flat for the next 10 years, a projection he bases on the index's current forward price-to-earnings ratio.