Panmure Liberum predicts sharp S&P 500 decline by 2027 end

Panmure Liberum has issued a cautious forecast for the S&P 500, predicting a significant decline to 5,000 points by the end of 2027. This projection marks a more than 35% drop from its last recorded close of 7,722.72. The firm's research analyst, Joachim Klement, warns that the current equity bull market, which began in October 2022, may end sooner than anticipated due to rising bond yields and interest rates.

Despite enduring headwinds such as stubborn inflation, higher interest rates, and a cooling of AI-driven optimism, the S&P 500 has gained 12.8% so far this year. Klement acknowledges that strong earnings growth and resilient economic data continue to support equities, but he emphasizes that the upcoming third-quarter earnings season and 2027 outlooks will be critical in assessing the market's sustainability.

Panmure Liberum's forecast contrasts sharply with other brokerages that expect the S&P 500 to end 2026 at or above 8,000 points. The firm also anticipates declines for Europe's STOXX 600 to 430 points and the UK's FTSE 100 to 8,260 by the end of next year. Klement cautions that further interest-rate hikes by the Federal Reserve and the Bank of England could accelerate the end of the current bull market.

Last month, major central banks, including the Fed and the European Central Bank, raised rates to combat inflation amid rising energy costs and a resilient economy. This move adds to the challenges already facing stock markets.