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  • 🚀 Why 2025 Could Be Another Winning Year for Stocks

🚀 Why 2025 Could Be Another Winning Year for Stocks

Plus how interest rates can help fuel the rally, and more

December 03, 2024

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Happy Tuesday! BofA sees the S&P 500 climbing higher in 2025, with corporate earnings growth and sector rotation leading the charge. Financials, energy and consumer stocks could outperform, while large-cap value offers stability in a Trump 2.0 era. Here’s how productivity gains might fuel the next leg up for equities — and what risks investors should keep in mind. Also, why the Fed may help catapult the underlying bullishness.

—Josh Enomoto

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MARKET RECAP

Yesterday: Markets edged higher Monday, led by large-cap stocks, as strong manufacturing data from China and the U.S. signaled resilience. Investors are focusing on upcoming labor market reports, with forecasts pointing to gradual cooling, supporting the soft-landing narrative.

On Our Radar: Job openings data will be released later this morning, with auto sales scheduled to be released at some time during the day. On the earnings front, investors will be locked in on Salesforce’s results.

TOP STORY

Bank of America just predicted a solid 2025 for the stock market, with the S&P 500 projected to gain 10%. Strong corporate earnings, productivity growth and sector rotation toward financials, energy and consumer stocks could drive the rally. Large-cap value stocks also offer inflation protection under Trump’s proposed policies.

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FIVE ZINGERS

Legal Barrier: A Delaware judge struck down Tesla CEO Elon Musk’s $56 billion 2018 compensation plan, citing conflicts of interest and procedural flaws, despite shareholders approving it again this year. TSLA shareholders should watch for a potential overhang on the stock.

Retail Bonanza: Major retailers saw a big spike in traffic via online and in-store pathways during the busiest Black Friday shopping weekend on record. Read how Wall Street analysts assess the major players.

Semi Showdown: The outgoing Biden administration implemented its third crackdown on China’s semiconductor industry within the past three years. Here’s how the latest rumblings may impact the geopolitical arena.

Greenback Blues: While the equities market has been booming, the U.S. dollar may be facing some challenges. Discover why this month could be a significant period for currency traders.

Streaming Profits: Content provider Netflix has been a strong performer throughout this year. However, intriguing dynamics might make NFLX stock a near-term buy for prospective investors.

SPECIAL OFFER

Editor’s Note: Every week, Benzinga Edge members receive the Insider Report. It’s a rundown of what to expect from the markets in the week to come, which sectors are outperforming and why, and most importantly, a selection of hand-picked stocks that are poised to move up because of that week’s trends. Here’s a sneak peek at one piece of the latest Insider Report’s sector forecast:

The tale of the tape since the second quarter this year continues to support the market's bullish outlook. The only sector ranking that gives me concerns is utilities (XLU), which continues to dominate in first place.

I'm most pleased with consumer discretionary (XLY), not only because of its recent surge over the past couple months, but especially the way it pulled away from its competitor, consumer staples (XLP).

I think the most undervalued sector in this tape right now is technology (XLK), which is actually hanging out in the bottom-half of the pack. This is a rare position for this market-leader, and with the prospect of rates coming down more, I would look for this one to start climbing again soon.

To keep reading and to find out how investors can prepare for the coming equities boom, sign up for Benzinga Edge here.

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