2025 U.S. Market Outlook
2025 U.S. Market Outlook
Chief Investment Strategist
Brian, Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both institutional …
Brian, Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both institutional …
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In his 2025 market outlook, BMO Capital Markets’ Chief Investment Strategist Brian Belski explains why U.S. equities will provide more balanced returns than the previous two years, and why a return to historical norms is a positive development.
For those looking for the broader North American view, you can watch Brian’s 2024 Canadian market outlook:
Hello, this is Brian Belski – Chief Investment Strategist at BMO Capital Markets
We recently published our 2025 Year Ahead Market Outlook, representing our 13th consecutive forecast on the US stock market on behalf of BMO.
As we expected, despite elevated Presidential election noise and emotion, geopolitical upheaval, heightened rhetoric surrounding concentrated equity performance, wavering inflation, not to mention a shifting Federal Reserve and interest rate environment, 2024 once again exhibited surprising equity performance. In fact, 2024 represented one of the only periods in our entire career where our investment strategy team had to increase our year-end forecast twice during the year. For our part, we remain resolutely bullish, with the stock market prowess demonstrated the last two years only reinforcing our longer-term view that US stocks remain fixated within a 20-25 year secular bull market that we believe began in 2009. However, as stocks enter year three of the more recent cyclical portion of this big bull market, we do believe performance and fundamentals will more closely match the historical norms – namely, in the high-single-digit / low-double-digit percentage range in 2025. In addition, we believe performance across most sectors, sizes, and styles will be more balanced – defining a period of broader performance across the entire spectrum of equities – which we believe is quite normal and healthy, that will ultimately ensure the stability and fortitude of the overall bull market in stocks. As such, our 2025 forecast for the S&P 500 Index year-end price target of 6,700 on earnings of $275 is a continuation of this thesis – and well within the historical average for stock market returns.
In terms of sectors in 2025, we favor Consumer Discretionary, Financials, and Technology; are neutral Communication Services, Energy, Industrials, Materials, REITs, and Utilities; while advising clients to underweight Consumer Staples and Health Care. In terms of size and style – we want investors to think of it as – everything in moderation – owning equal parts large, mid-, and small cap stocks – while also owning both value and growth together – thereby lacking a significant emphasis on any asset class in 2025. In essence, we own a little bit of everything.
Thanks so much for joining us – here’s to more balanced performance returns and a continuation of the secular bull market in 2025.
Hello, this is Brian Belski – Chief Investment Strategist at BMO Capital Markets
We recently published our 2025 Year Ahead Market Outlook, representing our 13th consecutive forecast on the Canadian stock market on behalf of BMO.
As we expected, 2024 was a snap-back year for Canada in terms of equity performance – in fact, Canadian equities even outperformed its vaunted neighbor to the south during several elongated stretches of time during 2024 - despite a whirlwind of macro negativity that dominated headlines for most of the year. From inflation to interest rate cuts to recession fears to US election uncertainty – many Canadian investors doubted the resiliency of the Canadian stock market. For our part, our process and discipline are defined by an intense focus on bottoms-up analysis and routinely avoiding headlines and consensus rhetoric, thereby diminishing the possibility of being reactive. After all, the stock market is a market of stocks, and given the traditional value and cyclicality of the Canadian stock market, let alone its current valuation discount at the overall index level compared to the US, we believe Canada’s opportunity to outperform its neighbor to the south in 2025 is quite high. As such, our 2025 forecast for the S&P/TSX Index year-end price target of 28,500 on earnings of $1,600 represents continued gains for Canadian equities - well within the historical average for stock market returns.
In terms of sectors in 2025, we favor Consumer Discretionary, Financials, REITs and Technology – Tech and Consumer Discretionary for growth and consistency; and Financials + REITS for income and yield. In terms of the other sectors, we are neutral Communication Services, Energy, and Industrials, while advising clients to underweight Consumer Staples, Health Care, and Utilities. In terms of size – we want investors to think of it as – everything in moderation – owning equal parts large and small cap stocks – thereby lacking a significant emphasis on any equity class in 2025.
Thanks so much for joining us – here’s to another positive surprise for the Canadian stock market performance in 2025.
