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The market outlook for 2025 sees U.S. GDP growing at a healthy rate, the stock market gains diversifying beyond the Magnificent Seven—with health care a likely winner—and an evolution in the AI sector that powered virtually all of last year’s rally.
Investors are eyeing 2025 with an eager optimism, hoping the markets will continue their strong performance from 2024.
The economy is on solid footing as inflation continues to come down and the labor market is stable enough to keep the Fed satisfied. The stock market finished another gangbusters year, up 24%. It doesn’t hurt that the business community got their candidate of choice in the November election. President-elect Donald Trump pledged to cut taxes and regulations, two campaign promises that are always welcome news to investors.
As 2025 begins, Fortune compiled a list of major market and economic predictions for the year ahead:
The economic growth that characterized the U.S. economy in 2024 is expected to continue, although not quite at the same levels. Goldman Sachs forecasts a 2.5% increase in the U.S. GDP compared to its 2.8% growth in 2024. Despite that slight dip, the healthy 2.5% clip would indicate the widespread recession fears of 2022 and 2023 have mostly been abated. Instead, the markets expect a growing economy that should keep investors feeling satisfied. Those positive feelings will also extend to consumers, the backbone of the U.S. economy, according to Goldman. As inflation keeps coming down, consumers should start to see lower prices and, perhaps more importantly, start to feel better about their finances. “Consumer spending should remain the core pillar of strong growth, supported both by rising real income driven by a solid labor market and by an extra boost from wealth effects,” Goldman Sachs chief economist Jan Hatzius wrote in November.
The S&P 500 will finish with gains north of 20% for consecutive years for the first time since 1998. So it makes sense that the tale of the stock market in 2025 will be similar to that of the overall economy: slightly worse than the year before, but still growing strong. For investors, that represents a rosy picture for the coming year. Fears of a recession or an unsustainably top-heavy S&P 500 seem to be in the rearview mirror. JPMorgan estimates a roughly 10% increase in the S&P 500 for 2025, according to an analyst forecast. While not an especially bullish projection, it comes as a change of heart from the banking giant, which earlier in 2024 had expected the stock market to struggle in 2025. Morgan Stanley also expected a similar increase in the S&P 500, although its bull scenario saw the index rise up to 7,400, which would mean about a 25% increase from current levels, according to a November report.