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4 stock market sectors Wall Street thinks will surge in 2025

Dec 22, 2024 - businessinsider.com
Wall Street firms are optimistic about four key stock market sectors going into 2025: financials, information technology, utilities, and materials. Financials are expected to benefit from deregulation and increased mergers and acquisitions under a Trump presidency, with banks likely to see growth due to lighter regulations and potential Fed rate cuts. The information technology sector is projected to remain dominant, driven by advancements in AI technology and robust spending on AI infrastructure, with software and services poised for growth.

Utilities are seen as a defensive sector that will benefit from AI's power demand and its domestic focus, which shields it from tariffs. Despite underperformance in 2024, the materials sector is expected to rebound due to low starting valuations and potential growth opportunities, especially with concerns about the Chinese economy and commodity prices already factored in. Overall, Wall Street anticipates a broader dispersion of market returns across various sectors and themes in 2025.

Key takeaways:

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  • Wall Street firms are optimistic about the financials sector, expecting it to benefit from deregulation and increased mergers and acquisitions under a Trump presidency.
  • The information technology sector is expected to remain dominant, driven by advancements in AI technology and robust infrastructure spending.
  • Utilities are seen as a defensive sector that will benefit from AI's power demand and have a strong domestic focus, shielding it from potential tariffs.
  • The materials sector, despite underperforming in 2024, is anticipated to make a comeback due to low starting valuations and potential growth opportunities.
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