Per the @WSJ, US “stocks on pace for best two years in a quarter of a century.”#markets #stocks #investors #investing pic.twitter.com/UBWG8wlDl5
— Mohamed A. El-Erian (@elerianm) December 31, 2024
The stock market had a stellar performance in 2023 and 2024, with the S&P 500 gaining about 23% and 24%, respectively. This marks a rare consecutive double-digit growth since 1997 and 1998. Wall Street analysts expect continued market growth in 2025, though on a more moderate scale compared to recent years.
Jefferies TOP picks for 2025: BIG bet on power, defence sectors; up to 55% upside potential in THESE 4 stockshttps://t.co/vRlPwPZ2l4
— ET NOW (@ETNOWlive) January 2, 2025
Most strategists forecast double-digit percentage growth for the S&P 500 in 2025, with an average prediction of a 14.8% rise. Tech and AI stocks, which drove growth in 2024, are largely expected to lead again in 2025. However, analysts warn of potential downsides, such as uncertainty surrounding tariff policies, potentially resurgent inflation, and other issues that could impede the stock market’s growth.
Will stock market witness FII outflow of Rs 3 lakh cr again in 2025? Nikunj Dalmia DECODES@nikunjdalmia https://t.co/yYi2xHNvVN
— ET NOW (@ETNOWlive) January 2, 2025
Jurrien Timmer, director for global macro at Fidelity Investments, said, “I am bullish on stocks for 2025, though with valuations high and the bull market maturing, I don’t think investors should expect such spectacular returns next year as we have seen this past year.”
The S&P 500 posted back-to-back annual gains of more than 20 percent for the first time since the late 1990s. Analysts expect stocks to continue rising in 2025. https://t.co/BQKIV22oZP via @NYTimes
— Vivian Salama (@vmsalama) December 31, 2024
Major banks, including UBS, Goldman Sachs, and Bank of America, estimate S&P 500 growth between 10% and 14% in 2025. Christopher Harvey, head of equity strategy at Wells Fargo, is among the more optimistic analysts, expecting the S&P 500 to reach 7,007 by the end of 2025, a gain of around 19%. Some analysts view the robust growth of US stocks as a sign of a new era in tech and AI, with sustainable valuations and strong future earnings growth supporting a continued rally.
Moderate growth is anticipated for market
Dan Ives, a senior analyst at Wedbush Securities, expects tech stocks to rise by 25% in 2025 due to less regulation under the Trump administration, picking Nvidia, Microsoft, and Palantir as his top winners. Nonetheless, the potential for a volatile policymaking environment during the Trump presidency, possible changes in Fed policy, and a market that has faced little resistance could pose challenges in 2025.
David Sekera, chief US market strategist at Morningstar, warned, “The most significant wild card on the table for 2025 will be the potential implementation of tariffs.”
Despite the bullish prospects for the market, key risks exist that could lead to more volatility in 2025. One major risk is the potential for higher-core inflation, which the Federal Reserve recently projected to hit 2.5% next year before cooling in subsequent years. Additionally, Trump’s proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and immigration curbs, could lead to significant disruption. However, stocks may fare well in the long term.
Charles Schwab senior investment strategist Kevin Gordon said, “Stocks can weather this out, and they can fare well in the long term, but not without some significant disruption.”
According to Fairlead Strategies ‘ Katie Stockton, a stock market correction is likely in the coming weeks. Technical indicators suggest a decline of nearly 10% for the S&P 500. Stockton recommends investors use relief rallies to hedge and only hold stocks that are trading above key support levels.
As the new year begins, investors will closely watch these developments to navigate the markets in 2025.
