Can the S&P 500 keep playing the hits for another year? The pros say yes.
The index is strutting into the new year with some extra swagger as it locks in back-to-back annual gains of more than 20% — that’s happened only four times in the past 150 years.
And it will likely see double-digit gains in 2025 hopped up on falling interest rates, Bank of America strategists led by Michael Hartnett said. (No matter that US inflation is at 3%, and the country has a $36 trillion debt pile and a 7% GDP deficit.)
The bank noted that the incoming Trump administration is in full-blown cheerleader mode, seeing stocks and crypto as key tools to stir up those “animal spirits.”
Ports and policies
The bullishness is not just fueled by optimism though — they’re riding on some real trends.
Imports at the Port of Long Beach are smashing records as companies rush to dodge impending tariffs, BofA noted.
Employers are also hoarding workers like Pokémon cards, anticipating stricter immigration rules. (No surprise, then, that unemployment claims are at rock-bottom.)
JPMorgan is singing a similar tune.
While its analysts expect tech titans to dial it down a notch (farewell, rocket ship earnings), they’re betting on other sectors to carry the torch in 2025. David Kelly’s team is banking on a more inclusive rally — a win for the other guys, if you will.
The buzzkill
So, the bull might not just keep running — it could start breakdancing.
But before you start daydreaming about retirement, let’s talk inflation. All these tax cuts and tariffs come at a cost. Rising prices could make a comeback, and that’s one of the many reasons why gold’s been rising lately. Hedge your bets, folks.
If inflation does rear its ugly head, it could throw a wrench into the Fed’s rate-cutting party.
That’s the thin thread bears are clinging to — Jerome Powell pausing the rate cuts could give them a fighting chance. Slim, but hey, a chance is a chance.
