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The Vanguard Group: Optimistic about the US stock market's outlook in 2025, anticipating strong performance from the financial and communication sectors.

Market IntelThursday, Jan 16, 2025 1:10 am ET

1min read

Lin Longjie, a financial advisor in Hong Kong of The Vanguard Group, expects a good performance of the US stock market as a whole in 2025, but with more unstable factors, the volatility will also be larger. He said that from the current situation, the market is in a relatively healthy position, with the S&P 500 index stable above its 50-day and 200-day moving averages, and expects the average growth of the S&P 500 index to be 5.3% this year. Meanwhile, he believes that the financial sector will still benefit from the high-interest environment, and is more optimistic about the financial and communication sectors, while the non-essential consumer goods sector may lag the market; the raw materials sector will record negative growth in 2024, indicating that the demand for large commodities is relatively weak, and related sector investment needs to be cautious.

Guo Mingshen, a financial advisor in Hong Kong of The Vanguard Group, said that bonds will have a greater impact on the stock market this year, especially if inflation becomes more persistent and unstable. The rolling one-year correlation between the S&P 500 index and the 10-year US Treasury bond yield will rebound to nearly zero in the second half of 2024, which is undoubtedly good news for the stock market. If this situation continues to 2025, the relationship between the market and inflation may return to a favorable position.

However, if inflation volatility heats up again (which will be more obvious after the implementation of tariff and labor policies), stocks may face more risks derived from bonds. Although the firm remains optimistic about the global and US market outlook this year, investors also need to be alert to the relevant risks under the influence of various policies.

Guo Mingshen also believes that the current mainland and Hong Kong stock markets are relatively cheap, and policy support will be the investment theme in the future.

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