The US stock market has outperformed global equities in recent years, and BlackRock’s Investment Institute anticipates this trend will continue into 2025. This projection is based on the firm’s belief in “US exceptionalism,” driven by robust corporate strength and earnings growth.
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BlackRock’s chief investment strategist, Wei Li, highlighted the expectation of stronger and broader earnings growth in the US, extending beyond the “Magnificent Seven” tech giants that have fueled market gains in recent years. This positive outlook on US earnings aligns with predictions from other Wall Street firms, reinforcing a bullish sentiment for 2025. Li emphasized the crucial role of earnings in driving long-term equity returns, noting particularly strong upward revisions for the US and Japan, where BlackRock maintains an overweight position in equities.
Earnings Growth and Economic Strength Underpin US Outlook
BlackRock’s confidence in continued US outperformance resonates with views expressed by other financial institutions. Bank of America, for instance, recently projected that the US economy will likely outperform in 2025. JPMorgan Asset Management also anticipates that the US’s leading role in the burgeoning field of artificial intelligence (AI) will propel its economy and stock market to global dominance over the next decade.
JPMorgan Asset Management’s chief global strategist, David Kelly, anticipates sustained, albeit moderated, earnings growth for mega-cap tech companies, alongside a reacceleration in other market sectors. This broader growth, combined with resilient economic fundamentals, favorable policy conditions, and long-term secular trends, is expected to support a more inclusive market rally in the coming year.
Sector-Specific Opportunities and a Pro-Risk Environment
BlackRock also identified sector-specific opportunities, highlighting the Utilities sector as a potential beneficiary of the expanding AI landscape due to increased power demands for AI server operations. This overall optimistic outlook has led BlackRock to increase its overweight position in US equities for 2025, embracing a “pro-risk” investment stance.
While BlackRock refrains from issuing specific S&P 500 targets, its bullish stance on US stocks aligns with the broader optimism prevalent on Wall Street. Current 2025 year-end S&P 500 targets range from 6,400 to 7,007, implying potential upside of 5% to 15% from current levels.
Factors Driving Market Optimism
Several factors contribute to this positive outlook, including anticipated robust growth in both the US economy and corporate earnings. A pro-business administration and potential Federal Reserve interest rate cuts are also seen as catalysts for further market gains. Wells Fargo equity strategist Christopher Harvey, known for his bullish 7,007 S&P 500 target, recently asserted that current data does not support a weak or negative year for the S&P 500, predicting a “solid-to-strong year” in 2025. This confluence of positive economic indicators and market sentiment points towards continued US stock market leadership in the coming year.
