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These are the 4 biggest forces that will shape the stock market in 2025

Dec 15, 2024 - markets.businessinsider.com
Wall Street strategists predict gains for the S&P 500 in 2025, driven by four key themes: Trump's trade policies, Federal Reserve interest rate cuts, AI investment returns, and consumer economic resilience. Trump's potential tariffs could lead to trade wars and inflation, impacting market growth. While the Fed is expected to cut rates, any deviation could affect stock prices. AI investments need to show revenue growth to sustain tech leadership, and continued consumer strength is crucial for economic stability and market gains.

The outlook is mostly bullish, with an average expected S&P 500 increase of about 8%. However, risks include Trump's policies potentially sparking inflation and trade wars, which could harm the economy and consumer balance sheets. AI's impact on productivity and economic growth remains uncertain, and any failure to deliver could lead to tech sector volatility. Overall, strategists emphasize the importance of economic growth and consumer resilience in maintaining the stock market rally.

Key takeaways:

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  • Wall Street strategists predict an 8% gain for the S&P 500 in 2025, driven by four key market themes.
  • Potential trade wars due to Trump's tariff threats could lead to inflation and economic recession, impacting stock market performance.
  • AI investments must deliver revenue growth to sustain tech's stock market leadership, with concerns about returns on invested capital.
  • Continued economic resilience and consumer strength are crucial for maintaining the stock market's upward momentum in 2025.
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