U.S. economy delivered an impressive performance in 2024, with the S&P 500 Index on track for a second consecutive year of strong positive returns, rising nearly 24%. Notably, the index posted its best monthly performance in November, following the outcome of the election.

As we enter 2025, with Donald Trump officially sworn in as President of the United States, lingering uncertainty surrounding domestic policy, trade, and fiscal measures remains a concern. Increased market volatility is expected as attention turns to the implementation of his policies during his first 100 days in office.

Nevertheless, we remain optimistic about the global growth cycle and expect developed market equities to outperform their emerging market counterparts in 2025. If President Trump successfully enacts tax cuts and deregulation, it could further boost consumption and investment, strengthening the economy. Overall, U.S. equities remain stable at all-time highs, supported by robust corporate margins and solid revenues from large-cap companies. We anticipate that most sectors will deliver positive earnings growth in 2025.

Easing inflation, a resilient labor market, and strong household balance sheets should bolster consumer spending and support broader economic growth. Additionally, the U.S.’s leadership in artificial intelligence, quantum computing, and semiconductor technology, combined with significant AI-related spending commitments from major tech companies, positions this sector as our top focus. Under the Trump administration, potential bold financial deregulation could benefit financial institutions, with ripple effects extending to areas like cryptocurrencies. President Trump has also signed laws to expedite energy projects, which could help alleviate energy supply constraints. These policy shifts contribute to a favorable backdrop for risk assets.

While U.S. growth appears strong, President Trump’s broad mandate to reverse policies from the Biden administration introduces potential risks. Key concerns include the possibility of universal tariffs on imported goods and increased domestic fiscal support, both of which could reignite inflationary pressures and destabilize global growth. The next four years are likely to be challenging and volatile, but we remain optimistic and vigilant, closely monitoring new policies introduced by President Trump.

Photo Credit: ABC News