Positive: Analysts predict strong year for Wall Street in 2025, driven by AI and US economy

From Investing.com: 2025-01-03 04:46:44

Analysts predict another strong year for Wall Street in 2025, driven by enthusiasm for AI and the US economy. Despite a slow end to 2024, US indices saw double-digit gains, with the benchmark hitting its best two-year performance since 1997-1998. The Federal Reserve’s rate cuts and easing inflation have also boosted market sentiment.

Nvidia emerged as the top global gainer in 2024, with a market cap increase of over $2 trillion due to high demand for AI-focused chips. The election of President Trump and other Republicans has raised hopes for business-friendly policies, although concerns linger over potential inflation from tariffs and deportations.

Capital Economics analysts expect strong returns for US equities in 2025, with a predicted 20% total return from MSCI’s USA index and 10% gain from MSCI’s World index excluding the US. They anticipate continued support from AI hype and higher valuations for tech firms, although Trump’s policies may have a negative impact on growth.

Despite potential challenges, the US economy is expected to outperform other advanced economies, albeit by a smaller margin than before Trump’s victory. Capital Economics analysts believe the drivers that boosted the stock market in 2024 will continue in 2025, with broad-based increases expected across the market.



Read more at Investing.com: AI hype, “US exceptionalism” seen boosting stocks in 2025