Morgan Stanley predicts that the U.S. stock market will continue to "sing high" in 2025, with sectors outside of tech giants likely to catch up

According to Zhitong Finance APP, investors can expect the upward trend of the U.S. stock market to continue next year, even though the S&P 500 index has already experienced a strong increase of over 50% since the beginning of 2023, and this growth momentum will not be limited to popular large technology companies. David Kelly, a strategist at JP Morgan Asset Management, pointed out that strong corporate earnings and the overall vitality of the U.S. economy will be key factors driving the stock market higher. However, he also reminded investors to be aware of potential risks such as overvaluation, overly concentrated portfolios, and uncertainties surrounding Trump administration policies. Nevertheless, they believe there are currently enough positive factors to maintain this momentum. In an interview, Kelly stated that although the S&P 500 index has achieved over 20% returns for the second consecutive year, there are currently no signs that the upward momentum is about to end. He expects the economy to continue growing over the next two years, with overall earnings also on the rise. However, he acknowledged that Trump's trade protectionist policies could trigger inflation risks, forcing the Federal Reserve to adjust its interest rate cut plans. To hedge against these risks, Kelly advised investors to increase overseas investments, particularly in international stocks, which have long-term growth potential and dividend yields that are twice that of U.S. stocks. Additionally, he pointed out that the leadership of the stock market will become more solid, with sectors outside of large tech stocks also accelerating their catch-up. For example, the so-called "seven giants" index has risen 55% this year, more than double the increase of the S&P 500 index. JP Morgan Asset Management is optimistic about the prospects of several industries, including the financial sector benefiting from deregulation and high interest rates, consumer goods companies focused on affluent customers, and the continuously innovating healthcare sector. At the same time, they also recommend that investors include small-cap stocks in their portfolios as they emerge from cyclical downturns. Despite facing risks such as overvaluation, high portfolio concentration, and uncertainties surrounding Trump administration policies, Kelly is not the only one with an optimistic outlook. Heavyweights on Wall Street, such as Goldman Sachs, Morgan Stanley, and UBS, also predict that the stock market will rise further by 2025. These institutions generally believe that despite some potential risks, strong corporate earnings and the overall vitality of the U.S. economy will be sufficient to support the upward trend of the stock market