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There are a handful of things that could shake the market from its expected path in 2025.
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Bank of America highlighted a handful of surprises that could rattle investors.
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The strategists are generally expecting another positive year for stocks, forecasting a 12% gain.
There are more than a few things that could jolt investors in 2025, potentially sparking a big move in markets, according to Bank of America.
In a recent note to clients, strategists at the bank came up with a handful of predictions for events that could disrupt markets this year against an otherwise bullish backdrop.
“The scenarios below are not BofA Research forecasts; but they are high-impact, contrarian possibilities that we believe some investors may not have considered,” the strategists wrote.
Here are six of the biggest surprises Bank of America thinks are possible in 2025.
The S&P 500 could gain another 20% or more in 2025, marking the index’s longest streak of returns of that magnitude since the years leading up to the dot-com crash.
Wall Street is expecting more muted returns for the benchmark S&P 500 this year, given that it finished 2024 with its second-straight year of double-digit growth. Forecasters have issued an average S&P 500 price target of 6,539, implying an 8% gain for the year.
Bank of America, meanwhile, forecast the index to end the year at 6,666, implying a 14% upside from current levels.
“However, a productivity boom, corporate tax cuts, deregulation-fueled capex, persistent inflation, inexorable passive fund flows, and few other attractive investment destinations could power stronger earnings growth and steady market technicals, causing another stretch of 20% gains in three straight years,” the bank said.
Trump’s tariffs could successfully reduce other countries’ trade surpluses, resulting in a range of positive developments in the US, including a shrinking deficit, increased production, and wages and employment seeing a boost, the bank said.
The strategists added that the value of the US dollar against rival currencies will be a key metric to watch when assessing the impact of tariffs.
“If in coming years, DXY moves towards 90, the ‘tough love’ scenario will have produced new trade and/or currency pacts and economic peace,” the bank wrote.
The Elon Musk-led DOGE could help fuel a rise in capital expenditures among businesses, if the push for government efficiency leads lawmakers to dial back regulation, strategists said.
