JPMorgan predicts US stocks will continue to "soar" in 2025, with other sectors catching up to tech giants
1min read Investors can expect the upward trend in the US stock market to continue next year, even though the S&P 500 index has already experienced a strong rise of over 50% since the beginning of 2023, and this growth momentum will not be limited to those popular large tech companies. David Kelly, strategist at the asset management division of JPMorgan Chase, points out that the strong corporate earnings and overall vitality of the US economy will be key factors in driving the stock market to continue to rise. However, he also reminds investors to be aware of potential risks such as overvaluation, portfolio concentration, and uncertainty over Trump's government policies. However, they believe there are enough positive factors to maintain this momentum.
Speaking in an interview, Kelly said that there is no indication that the upward trend is about to end, despite the S&P 500 index achieving more than 20% returns for the second consecutive year. He expects the economy to continue growing over the next two years, with overall earnings also rising. However, he also acknowledges that Trump's protectionist trade policies could trigger inflation risks, forcing the Federal Reserve to adjust its plans for rate cuts.
To hedge against these risks, Kelly recommends investors increase their investments overseas, particularly in international stocks that have long-term growth potential and dividend yields that are twice those of US stocks. In addition, he notes that the leadership of the stock market will become more solid, with other sectors also accelerating their catch-up. For example, the so-called "Seven Giants" index rose 55% this year, more than twice the S&P 500's gain.
JPMorgan Asset Management is bullish on several sectors, including the financial industry that benefits from deregulation and high interest rates, consumer goods companies focused on wealthy clients, and the healthcare industry that is constantly innovating. At the same time, they suggest investors include small stocks in their portfolios as they emerge from cyclical downturns.
Despite the risks of overvaluation, portfolio concentration, and uncertainty over Trump's government policies, Kelly is not alone in his optimism. Wall Street heavyweights such as Goldman, Morgan Stanley, and UBS also predict further stock market gains by 2025. These institutions generally believe that the strong corporate earnings and overall vitality of the US economy will be enough to support the upward trend, despite some potential risks.