What Does 2025 Hold for Investors?

Global equity markets finished lower for the week. In the U.S., the S&P 500 Index closed the week at a level of 5942, representing a decrease of 1.55%, while the Russell Midcap Index moved 0.84% last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned -0.45% over the week. As developed international equity performance and emerging markets were mixed, returning 0.13% and -0.81%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the week at 4.60%.

As we begin the new year, we wanted to provide our readers with some of the recent insights of our Chief Investment Officer, Kevin Mahn, concerning the upcoming year. The Top 10 Investment Themes by Kevin are a long-standing New Year’s tradition and have now been published on the Forbes website for 11 consecutive years.

To start, Kevin sees the theme for 2025 as “Growth Opportunities Ahead.” This theme does not imply that all areas of the market will move higher in the New Year because they likely will not. It also does not mean the economy will experience exponential growth because it likely will not. Finally, it does not imply that periods of short-term bouts of volatility will not happen, as they likely will, given current valuations and the many geopolitical and central bank uncertainties that lie ahead. What it does suggest, however, is that the next four years will undoubtedly look very different than the prior four years, and the next decade will look very different than the last decade. Over the shorter term, the outlook for lower interest rates and inflation, coupled with expected economic growth and stability under a Trump Administration (with the support of Congress), provides tailwinds for potential growth opportunities in both equities and fixed income. However, while we see numerous growth opportunities ahead in 2025, investors would be wise to be selective as growth will likely be less than what the stock market experienced in the prior two years and more pronounced in certain areas of the market than others. We highlight some of these areas below.

Below please find an outline of these themes. To access the full article, please click on the following link: Top 10 Investment Themes for 2025.

1. Bull Market and Earnings Growth Expansion
2. The Long Game of Artificial Intelligence Investing
3. Increased Investment in Defense and Security
4. Fed Adopts More Gradual Pace toward Interest Rate Cuts
5. Large Cap Pharma Turns to Small Cap Biotech for Answers
6. Munis Poised to Perform
7. Financials (including Regional Banks) Rebound
8. Preferreds Benefit from Financials Rebound and Lower Interest Rates
9. Look to Sources of Power to Help Power Your Returns
10. Expect More Short-Term Bouts of Volatility, but Don’t Abandon Stocks

Best wishes for a prosperous 2025!

Equity and Fixed Income Index returns sourced from Bloomberg on 1/3/25. Economic Calendar Data from Econoday as of 1/3/25. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.

Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.