Investors are optimistic about 2025, believing the economy's stability and White House support will propel the stock market upward. This optimism contrasts with the start of the year, when analysts underestimated the market's strength. The S&P 500 index, slightly down on New Year's Eve, rose 23 percent last year, almost matching its 2023 gain. This marks the first time since 1998 that the benchmark index has risen over 20 percent consecutively.
Analysts anticipate an average 10 percent increase in the S&P 500 for 2025, including those at Morgan Stanley and JPMorgan Chase, who previously predicted a downturn. John Stoltzfus, chief investment strategist at Oppenheimer, is the most bullish on Wall Street, forecasting a 20 percent gain in 2025. After 2022's inflation spike led to rapid interest rate increases by the Federal Reserve, stocks plummeted as many anticipated a recession. However, the downturn didn't materialize; inflation gradually cooled, and the Fed began cutting rates this year, bolstering the economy. Despite lingering price pressures impacting consumer budgets, the economy and markets remain strong. Alan McKnight, chief investment officer at Regions Bank, noted the economy's resilience despite concerns last year. In 2024, approximately US$500 billion flowed into US stock funds, with over half entering in the fourth quarter after the Fed began cutting rates. The two busiest weeks were after November's Election Day and December's most recent Fed rate cut