Source: Wall Street See

As American investors pour into the "old economy," strategists predict that the S&P 500 index will rise by another 10% next year, aiming for 6666 points, and cyclical stocks will see conditions for a "perfect rise".

On Monday, Savita Subramanian, Chief US Equity Strategist at Bank of America, said in an interview with CNBC that cyclical stocks are expected to deliver strong returns in 2025. She pointed out:

"Cyclical stocks typically perform well during periods of economic expansion, including industries such as csi commodity equity index, construction, and infrastructure. Now, investors are flocking to the "old economy," where these sectors will see more room for growth.

Subramanian also pointed out that the equipment companies are using is not very efficient. If they are replaced, companies will become more efficient. This requires spending money on the old economy. In other words, to improve efficiency, infrastructure rebuilding is almost a necessity.

She believes that the economy is already "prepared" for a new round of spending cycles, all of which create perfect conditions for cyclical stocks to substantially outperform large cap in the coming years.

In cyclical stocks, Subramanian is particularly bullish on the manufacturing industry. Despite data from the Institute for Supply Management (ISM) showing that manufacturing has been in contraction for 24 out of the past 25 months, she mentioned that factors such as reshoring of manufacturing in the USA, electrical utilities development, and new infrastructure construction demand, as well as tech companies seeking investment in ai and datacenter construction, are all bullish for the manufacturing industry's growth.

Subramanian stated:

"Some technology companies have already revealed to Bank of America that they will invest heavily in technology, electrical utilities, infrastructure, metal, and machinery in the coming years. I believe this will be a huge boost for manufacturing sector expenditures."

Not only Bank of America, but Morgan Stanley and Goldman Sachs also hold optimistic views on cyclical stocks, especially in the financial sector. Morgan Stanley stated that the financial sector has outperformed other areas of the market. The iShares S&P 500 Financials Sector UCITS Exchange Traded Fund has risen 36% this year, exceeding the benchmark index's increase of 27%. Goldman Sachs also mentioned that hedge funds have been buying cyclicals in large quantities in the third quarter, with a particular focus on financial stocks.

Editor / jayden