Investors who have watched from afar as stocks soared to new highs over the past two years may be presented with an interesting access point in 2025.
This year could be a great opportunity for investors who have been worried that the run-up in stocks since 2023 looks unsustainable. While Wall Street still sees stocks chugging higher, it won’t be as fast or as linear as in past years, and there could be plenty of dips for investors to buy along the way.
Scott Wren, senior market strategist at Wells Fargo, said he believes the market is heading toward an “opportunity zone” this year. The bank estimates that the S
In a note to clients on Wednesday, Wren advised investors to be prepared to profit from any market pullback.
“And so we favor using pullbacks like these to reallocate cash and short-term instruments in increments into equity positions,” Wren wrote. “In the coming weeks and months, the potential for more attractive entry points to increase exposure could very well materialize in both equities and fixed income. We want to be ready.”
Stocks have fallen in recent weeks as investors have the option that some of Trump’s economic policies could also fuel new inflationary pressures and influence interest rates to stay high longer.
But investors were calmed by new inflation data released on Wednesday, which showed core inflation was slightly cooler than expected in December. These numbers bolstered investors’ hopes for a rate cut, and markets are still counting on one or two cuts until the end of the year.
Meanwhile, stocks are still buoyed by strong fundamentals, according to Mark Hackett, lead market strategist at Nationwide. Hackett said the economy appears poised to avoid a slowdown in 2025 and that strong generational gains will continue in the broader market.
“Market corrections are a general component of the cycle, typically occurring every 18 months, and we are expecting one. “The 8% decline we are seeing for the average S&P 500 company is not disorderly or panic-driven, but rather a natural recalibration after a strong year,” Hackett wrote of the latest wave of hype after markets reached record levels in December.
“This is a textbook case of the market getting ahead of itself and self-correcting – it is a healthy, expected and ultimately constructive case for long-term market stability,” he added.
Adam Turnquist, lead technical strategist at LPL Financial, also highlighted the positive backdrop for stocks, despite recent “technical damage” to the S&P 500 and the potential for additional losses.
In a note, Turnquist highlighted strong expectations for corporate earnings expansion and continued enthusiasm for AI, which could drive the market higher.
Markets are also anticipating pro-growth policies from president-elect Donald Trump, despite risks that parts of his agenda could soke higher inflation and add to the deficit, he added.
“Overall, the weight of technical evidence suggests that the recent pullback may not be over. However, the positive aspect of a deeper pullback is that it may also offer a potential buying opportunity in this bull market, because, what “More importantly, the S&P 500 remains solidly above its long-term uptrend, with cyclical stocks primarily leading the way,” he wrote.
Wall Street expects another positive year for stocks in 2025, even after consecutive years of gains of more than 20% for the S