The US stock market could take an unexpected turn in 2025 – Stifel analyst Barry Bannister predicts a sharp correction. That’s what lies behind it.
• S&P 500 could fall in 2025
• Stifel analyst warns of economic challenges
• US stock market in danger?
The forecasts for the US stock market in 2025 were mostly bullish, but now a prominent analyst is warning investors of a possible correction. Barry Bannister, chief investment strategist at Stifel, expressed concerns that the market could come under pressure in the coming months on CNBC’s “Squawk on the Street” on Dec. 19. Bannister said ongoing economic challenges could cause the S&P 500 to close below its current levels in 2025.
Expert warns: Persistent inflation is weighing on the market
In an interview with CNBC, Bannister sees inflation not falling fast enough, which is weighing on economic growth, as a decisive factor in the market correction. This could prompt the US central bank, the Federal Reserve, to continue keeping interest rates high. Despite efforts to cut interest rates, Bannister expects the rate cuts will be less severe than originally thought. Bannister therefore expects the S&P 500 to initially continue to rise in 2025 in the first half of the year, but to fall significantly in the second half of the year. He predicts that the S&P 500 will end in the mid-5,000s – a noticeable correction compared to the record levels of around 6,000 points at the end of 2024.
Stock crash ahead? Weak economic growth slows the stock market
A key problem that Bannister cites in the CNBC interview is weaker economic growth in the United States. The analyst expects gross domestic product (GDP) to fall to around 1.5 percent in the second half of 2025, weighing on consumption growth due to lower real wages and weaker investment. This economic slowdown could lead to a decline in corporate profits and therefore stock prices. The Stifel expert further emphasizes that the environment is not conducive to a continuation of the current “stock mania”.
That’s why the Stifel analyst recommends defensive sectors to investors
Given these challenges, Bannister, speaking to CNBC, advises investing in defensive sectors that could benefit from slower economic growth. Healthcare, utilities and consumer goods stocks in particular would do well in such a market environment. These so-called “value” sectors are considered more stable and less susceptible to the fluctuations of the overall market.
The big forecast debate for 2025: bull or bear markets?
While Bannister is one of the few strategists who expects the S&P 500 to decline in 2025, he is not alone in his expectation of a correction in the second half of the year. For example, Fundstrat’s Tom Lee predicted in his 2025 Outlook that the S&P 500 could rise to 7,000 points in the first half of 2025 and then fall to around 6,600 in the second half of the year.
Other strategists, like Charles Schwab’s Kevin Gordon, believe the market could continue to do well as long as economic growth remains robust. “The growth backdrop has been a key driver of the stock market rally,” Kevin Gordon, senior investment strategist at Charles Schwab, told Yahoo Finance. “If inflation is still relatively stubborn but overall economic performance remains relatively strong, as has been the case for most of this year, then I think the market can continue to do well.”
S&P 500 at a glance: Should investors be worried now?
Barry Bannister’s assessments offer a bearish outlook for the US stock market in 2025. Higher interest rates, weaker economic growth and persistent inflation could weigh on the market. Despite Stifel analyst Barry Bannister’s pessimistic forecast, the future of the US stock market remains to be seen. Although some challenges may weigh on the market, there remains optimism among other experts. In any case, it remains important to continue to monitor developments closely in order to be able to react flexibly to possible fluctuations.
Editorial team finanzen.net
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