Panmure Liberum Predicts Sharp Drop in S&P 500 by 2027

Panmure Liberum has issued a stark warning for U.S. equities, forecasting a significant drop in the S&P 500 by the end of 2027. The brokerage expects the index to fall over 35% to 5,000 points from its recent close of 7,722.72. This projection contrasts sharply with other analysts who anticipate higher levels through 2026. Panmure Liberum attributes this decline to the risks posed by continued interest rate hikes from the Federal Reserve and the Bank of England.

The firm's outlook suggests that the equity bull market, which began in October 2022, may be nearing its end sooner than many investors expect. Despite gains of 12.8% so far this year, the S&P 500 faces challenges from stubborn inflation, rising bond yields, and higher interest rates. Joachim Klement, a research analyst at Panmure Liberum, highlighted that while strong earnings growth and resilient economic data currently support equities, the upcoming third-quarter earnings season and companies' 2027 outlooks will be crucial in determining market strength.

Panmure Liberum's forecast also extends to European markets, predicting the STOXX 600 to drop to 430 points and the FTSE 100 to 8,260 by the end of 2025. These projections reflect heightened central bank policy risk, as recent rate hikes by major central banks aim to contain inflation amid higher energy costs and a resilient economy. The policy backdrop remains a central risk for equity markets in both the U.S. and Europe.