According to the Financial Associated Press on December 12 (Editor: Liu Rui), with many institutions on Wall Street distributing optimistic expectations for the 2025 US stock market, Tom Lee, co-founder and research director of American investment firm Fundstrat Global Advisors, known as the "Wall Street Oracle," also released forecasts for the stock market outlook in 2025.

However, as one of Wall Street's longest-standing bulls, his prediction this time is not as optimistic as in previous years, and his expectations for next year's US stock market trends are not as confident as those of Wells Fargo & Co, Oppenheimer Asset Management, and other institutions.

The US stock market is expected to rise first and then fall next year.

Tom Lee expects that the US stock market will still rise in 2025, but the increase will be far less than in 2023 or 2024. He set two price targets for the S&P 500 Index in 2025: a mid-year target of 7000 points and an end-of-year target of 6600 points.

He believes that in the first half of next year, the US stock market may rise 16% from its current level, reaching a peak of 7000 points, but most of the gains are likely to evaporate in the second half, with a partial rebound before the end of the year.

"In 2025, the US stock market will face strong bullish factors. But we believe this is a 'two-year' story," Lee stated in his 2025 outlook report.

Overall, Lee predicts that the S&P 500 Index will rise 8% in 2025, which is roughly in line with the historical average annual ROI of US stocks and slightly higher than Wall Street's average end-of-year target of 6539 points for 2025.

Two major bullish factors.

Li believes there are two supporting factors for the US Stocks market next year.

The first is the "Federal Reserve": It is expected that the Federal Reserve will boost the market through further interest rate cuts - as long as inflation remains subdued, the Federal Reserve will continue to cut rates to support the labor market.

The other factor is "Trump": President-elect Trump will implement policies such as tax cuts that are favorable to businesses, which will boost corporate confidence and increase corporate profits. Additionally, Li indicated that under Trump's administration of revenue management, a wave of mergers and acquisitions is expected.

The report stated that these factors should prompt investors to shift funds from Cash / Money Market and Bonds to Stocks, and could even trigger a return of "animal spirits," helping to push up stock prices.

Two major risks.

However, Tom Lee is not entirely optimistic; he highlighted two major risks that could shake the market next year.

"For us, the downside risk is: DOGE (Musk's 'Department of Government Efficiency') is too effective, driving significant cuts in fiscal spending that affect GDP; in addition, the implementation of tariffs also impacts GDP."

These two risks, along with the fact that historically in the USA, whenever there have been two consecutive years with an ROI of 20%, the returns in the second half of the third year are usually lower, lead Li to expect a significant correction in the USA stock market in the second half of next year.

He expects the S&P 500 Index to fall from a high of 7000 points in the second half of next year to around a low of 6000 points, and then rebound to 6600 points by the end of the year.

As for Global Sectors, he prefers financials, industrials, Bitcoin-related Stocks, and Small Cap stocks.

Editor/rice