Wall Street Predicts 2025 To Be Investors' Best Time to 'Buy The Dip'

After "surging" for two years, what investors care about most now is undoubtedly whether the upward trend in the stock market can continue this year. According to those professionals on Wall Street, investors who have been "on the sidelines" and hesitant to enter the market before may have their chances to "join the party" in 2025.

The current view on Wall Street is that this year may be an excellent opportunity for onlookers to return to the market—the U.S. stock market will continue to rise, but the pace of increase will not be as fast and linear as in the past two years. In this process, investors will have the opportunity to buy on dips.

Scott Wren, Senior Global Market Strategist at Wells Fargo, said that he believes the market is heading towards an opportunity zone this year. The bank expects that the S&P 500 Index will close between 6,500 and 6,700 points this year, which means the index could rise by up to about 13% from the current level.

In his latest report, Wren suggested that investors should be ready to take advantage of any market pullback.

"We favor using pullbacks like these to reallocate cash and short-term instruments in increments into equity positions, Wren wrote. In the coming weeks and months, the potential for more attractive entry points to increase exposure could very well materialize in both equities and fixed income. We want to be ready."

In recent weeks, as investors weighed the possibility that some of Trump's economic policies could trigger new inflationary pressures and affect the pace of the Fed's rate cuts, the U.S. stock market experienced a pullback. However, the latest inflation data released on Wednesday has once again encouraged investors. Federal Reserve Governor Waller also said that if the economic data continues to improve, the Fed may cut rates again in the first half of 2025.

Meanwhile, according to Mark Hackett, Chief Market Strategist at Nationwide, the U.S. stock market is still supported by strong fundamentals. He said that the U.S. economy is expected to avoid a recession in 2025, and the strong rise of technology stocks will continue to support the entire market.

"Market corrections are a normal part of the cycle, typically occurring roughly every 18 months, and we're due for one. The 8% pullback we're seeing for the average S&P 500 company isn't disorderly or panic-driven, but rather a natural recalibration after a strong year," Hackett wrote when referring to the latest round of selling after the market hit record highs in December last year.

"This is a textbook case of the market getting ahead of itself and self-correcting—healthy, expected, and ultimately constructive for long-term market stability," he added.

Adam Turnquist, Chief Technical Strategist at LPL Financial, also pointed out the positive outlook for the U.S. stock market.

In his latest report, he noted that although the S&P 500 Index has recently experienced a "technical pullback" and may have further room to fall, strong expectations for corporate earnings growth and continued enthusiasm for artificial intelligence could help drive the market higher.

He also added that the market expects President-elect Trump to introduce pro-growth policies, although some of his agenda may increase inflation and the deficit.

"Overall, the weight of the technical evidence suggests the recent pullback may not be over. However, the silver lining to a deeper drawdown is that it could provide a potential buying opportunity back into this bull market, as most importantly, the S&P 500 remains above its longer-term uptrend, with cyclical stocks primarily leading the way," he wrote.

At present, Wall Street generally expects that the U.S. stock market will rise again in 2025, with an average year-end target price of 6,539 points, despite the S&P 500 Index having risen by more than 20% for two consecutive years.