The bull market remained alive in 2024 despite all the prophecies of doom and headwinds. For the coming year, experts expect the rally to continue – and further records, particularly for US stocks.
• Bull market continues
• Experts confident for continuation in 2025
• No hard landing
The bull market has now lasted more than two years. Despite geopolitical tensions caused by Russia’s ongoing war of aggression in Ukraine and a worsening of the situation in the Middle East, stocks are hardly slowing down in their upward trend. Intermittent setbacks, seen by pessimists as the beginning of the end of the bull market, were quickly overcome, and investor interest in buying remained high after the temporary price declines. Experts do not agree on how long a bull market lasts on average. The forecasts range from around four years to seven years – depending on where you set the start and end times. However, numerous experts agree that the current bull market has not yet reached its peak – things are expected to continue to rise in 2025.
Morgan Stanleyy sees election as another price driver
The outcome of the Nov. 5 election could accelerate the bull market cycle for U.S. stocks, Andrew Slimmon, senior portfolio manager for U.S. equities at Morgan Stanley Investment Management, told MarketWatch. One can’t help but wonder whether the election result will continue to boost US stocks. The market expert also referred to the maxim of the legendary investor John Templeton: “Bull markets are born in pessimism, grow in skepticism, mature in optimism and die in euphoria,” is one of his most famous quotes. Simmons sees the current bull market in its maturing phase: optimism has continued to increase after the election, and the economy is also recording solid growth.
A recession, as many experts had expected at the beginning of 2024, is not in Slimmon’s cards for the new year. “I don’t think you’ll see many people being very bearish about the outlook for stocks in 2025,” he said. With the economy performing stronger than many expected, “we’ve gone from a ‘hard landing’ to a ‘soft landing’ to ‘no landing,'” he points out.
In his opinion, investors are expecting that the US economy will continue to gain momentum under the new Republican administration. He points to the likely policies that the country is likely to face under Trump 2.0, including planned corporate tax cuts and increasing deregulation – all potentially growth-enhancing measures. Slimmon is also hardly concerned about the concerns of some skeptics that the prospect of trade tariffs could drive up inflation and create headwinds for stocks. He believes Trump will use tariffs as a “negotiating tool” and that the president-elect is unlikely to raise them to a level that would cause inflation to “skyrocket” next year, MarketWatch said.
Optimism also at Goldman Sachs
Goldman Sachs doesn’t see an end to the bull market in the new year either. David Kostin, chief US equity strategist at the lender, expects the S&P 500 to reach 6,500 points by the end of 2025.
“In our fundamental macro outlook, the economy and earnings continue to grow and bond yields remain at current levels,” Yahoo Finance quoted the expert as saying. However, he admits: “But event risk remains high until 2025, due to, among other things, the potential threat of a blanket tariff and the potential risk of even higher bond yields.”
In his opinion, the dominance of the “Magnificent Seven” is likely to lose momentum as a growth driver. The tech giants will continue to outperform the rest of the S&P 500 next year, but with “the narrowest lead in seven years.” Kostin expects that in 2025 an outperformance of only seven percent will be seen. “The narrowing of the difference in earnings growth rates should be accompanied by a reduction in relative stock returns,” said Kostin. Although the ‘micro’ earnings growth story supports the continued outperformance of the ‘Magnificent 7’, more ‘macro’ factors such as economic growth and trade policy support the rest of the S&P 500 stocks.
In his market outlook, Kostin considers stocks that can benefit from an increase in merger and acquisition activity under the administration of the president-elect to be recommended. The expert also advises companies that benefit from an increase in activity among small and medium-sized companies.
Editorial team finanzen.net