Stock market 2025, as we look ahead to 2025, several factors may influence the stock market's performance, making forecasts inherently uncertain.
Wall Street forecasts indicate that most analysts expect double-digit growth for the S&P 500 in 2025, although this growth is projected to be more moderate than that of 2024. According to FactSet, the S&P 500 is anticipated to rise by approximately 14.8% in 2025.
The robust performance of U.S. stocks last year was driven by strong economic growth, easing inflation, a series of rate cuts by the Federal Reserve, and increased investor optimism following President-elect Donald Trump’s victory. In particular, technology and AI stocks emerged as the standout performers in 2024, and they are expected to continue leading the growth narrative in 2025.
Despite the optimistic outlook, analysts from Bank of America caution that several factors could hinder market growth in 2025. Uncertainties surrounding tariff policies proposed by Trump, the potential resurgence of inflation, and escalating geopolitical tensions pose risks to the stock market’s stability.
“I am bullish on stocks for 2025, though with valuations high and the bull market maturing, I don’t think investors should expect quite such spectacular returns next year as we have seen this past year,” stated Jurrien Timmer, Director for Global Macro at Fidelity Investments.
The S&P 500 concluded 2024 with an annual gain of about 23%, following a 24% rise in 2023. This marked the first time since 1997 and 1998 that the index achieved back-to-back gains exceeding 20%, according to FactSet data.
The thriving stock market benefits not just traders; it also bolsters retirement savings and acts as a general indicator of economic health. However, Wall Street analysts are skeptical about the feasibility of another year with gains above 20%. Major banks, including UBS, Goldman Sachs, and Bank of America, project S&P 500 growth in 2025 between 10% and 14%—still healthy by any measure.
Among more optimistic analysts, Christopher Harvey, head of equity strategy at Wells Fargo, predicts the S&P 500 could reach 7,007 by the end of 2025, reflecting a gain of about 19%. The expectation of continued market gains stems from forecasts of strong economic growth, solid corporate earnings, and a business-friendly administration under Trump.
Stock market today: some analysts view the impressive growth of U.S. stocks as indicative of a new era in technology and AI. They believe sustainable valuations and robust future earnings growth will support a continued rally.
Dan Ives, a tech bull and senior analyst at Wedbush Securities, anticipates a 25% rise in tech stocks in 2025. He credits this growth to reduced regulation under the Trump administration and a favorable “Goldilocks foundation” for major tech companies, including Tesla. Ives identifies Nvidia, Microsoft, and Palantir as top tech winners for AI in 2025, all of which also performed well last year.
Despite the optimistic projections, the potential for volatility during the Trump presidency could create challenges for stocks in 2025. While the Federal Reserve has effectively managed inflation without pushing the economy into recession, inflation remains a concern.
In December, the Fed indicated what some economists termed a “hawkish cut,” suggesting that after cutting rates, further reductions may be delayed. Following its final policy meeting of 2024, the Fed adjusted its inflation outlook for 2025, raising it from 2.1% to 2.5%.
Concerns regarding inflation and the Fed's stance contributed to a market downturn in early December, and stocks have struggled to regain momentum since. The Dow experienced its longest losing streak since 1974 on December 18.
Traders currently predict only an 11% chance of a rate cut in January, according to the CME FedWatch tool.
“The Fed’s admitted uncertainty regarding monetary policy actions in 2025, combined with the expectation of only two rate cuts in 2025 rather than four, has amplified investor uncertainty and concern,” explained Sam Stovall, Chief Investment Strategist at CFRA Research.
As the new year unfolds, investors will be closely monitoring key issues, such as potential tariffs, that could significantly impact markets under Trump’s administration.
“The most significant wild card for 2025 will be the potential implementation of tariffs,” noted David Sekera, Chief U.S. Market Strategist at Morningstar.
An extended selloff in the stock market could jeopardize the U.S. economy. Mark Zandi, Chief Economist at Moody’s Analytics, expressed concerns on X, stating the economy is “highly vulnerable to a selloff in the stock market.” He pointed out that the recent stock market growth has largely been fueled by wealthy households opting to spend more and save less.
“If the stock market falters—as I believe is a serious risk—these wealthy households would likely respond by saving more and spending less,” Zandi warned.
Looking ahead to 2025, the stock market is poised for continued growth but faces a range of uncertainties that could affect its trajectory. While many analysts remain optimistic about double-digit gains, potential risks from inflation, policy changes, and geopolitical tensions will require close monitoring. Investors will need to stay informed and adaptable as they navigate the complexities of the evolving market landscape.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
