Top 10 Wall Street Banks' 2025 Outlook for Major Asset Markets
2min read Looking back on the past year, the financial markets have dished out both pleasant surprises and memorable moments for investors. Take the U.S. stock market, for instance. Amid the ongoing AI frenzy, the Federal Reserve's dovish pivot, and the looming prospect of "Trump 2.0," the three major stock indices have been on a tear, repeatedly hitting all - time highs. The S&P 500 closed at an all - time high nearly 60 times, the NASDAQ breached the 20,000 - point mark for the first time ever, and the Dow Jones Industrial Average topped 45,000 for the initial time.
The U.S. stock market's allure to global capital is on the verge of hitting an all - time high. As per a report by Bank of America strategists, U.S. equity funds are projected to experience a record - breaking influx of capital in the past year, with the annualized total expected to reach $448 billion. What's more, the combined market capitalization of U.S. - listed companies has, for the first time in 22 years, exceeded half of the global total.
Nonetheless, with Trump's impending return to the White House, the potential slowdown in the Federal Reserve's rate - cutting spree, and various factors like U.S. inflation, the 2025 market is fraught with uncertainty. So, the burning questions are: Can the bull run in the U.S. stock market persist this year? Will the greenback retain its strength? And how much more will the Fed slash interest rates? The top Wall Street investment banks have stepped up to offer their outlooks.
U.S. Stocks
By and large, investment banks are bullish on the U.S. stock market, seeing further upside potential this year. With the U.S. economy chugging along steadily and AI investment in full throttle, the tax cuts and regulatory rollbacks expected after Trump takes office could give the market an extra boost. However, investors need to keep a sharp eye on potential landmines such as the tech bubble, tariffs, and geopolitical jolts. Tariffs, in particular, pose the greatest threat to derailing the U.S. bull market.
The Fed Rate
The market seems to be in lockstep in anticipating that the Federal Reserve will hit the brakes on its accommodative stance. Currently, U.S. inflation is showing some staying power. Coupled with Trump's potential policy arsenal, the Fed may need to cross a higher bar to justify further rate cuts. The prevailing view in the market at present is that only two rate cuts are in the offing.
The U.S. Dollar
Wall Street is overwhelmingly bullish on the U.S. dollar. Policy shifts following Trump's return to power, along with the resilience of the U.S. economy, are likely to underpin the dollar. Goldman Sachs noted in a research note that the U.S. might roll out more extensive tariff and fiscal policy adjustments in the future, which would further fortify the dollar's competitiveness and crimp the performance of other rival currencies. Additionally, the skewed capital flows and the robust U.S. economy are providing rock - solid support for the dollar.
Crude Oil
At present, experts are more bearish than bullish on next year's oil prices. The market consensus is that oil prices will hover around the current levels in 2025, with Brent crude likely to stay at a low of $70 per barrel. Given the potential for an uptick in trade tensions, the risk is tilted to the downside.
Gold
Gold was one of the market's star performers in 2024. Regarding this year's outlook, the market sentiment remains predominantly bullish. Analysts opine that while the gold market may be choppy, factors like central bank buying and the Fed's rate - cutting cycle will continue to buoy gold prices.
U.S. GDP
This year, the U.S. GDP is navigating through a minefield of uncertainties. Elements such as the transition period following Trump's assumption of office, the job market dynamics, inflation trends, and shifts in consumer spending patterns will be under the microscope of analysts. Morgan Stanley forecasts that the U.S. economy may decelerate this year, while inflation could prove more tenacious.