According to financial news on January 4 (Editor Liu Rui), Ohsung Kwon, a securities strategist at Bank of America, stated that USA manufacturing is likely to see a boost by 2025, which could enhance the overall US stock market.

Bank of America expects the USA manufacturing sector to revive.

Kwon is bullish on the overall performance of the US stock market in 2025, and believes that, in addition to bullish factors such as Trump's deregulation and the AI technology revolution, the revival of the USA manufacturing sector may also provide potential catalysts for US stock market increases.

According to data from the USA Supply Management Association, manufacturing activity in the USA has been contracting for most of 2023 and 2024. However, Kwon expects a recovery in the USA manufacturing sector in 2025, which could accelerate corporate earnings growth and boost stock prices.

The reason this is so important for the stock market is that half of the earnings of the S&P 500 Index constituent stocks are related to the manufacturing cycle. We have already passed through the longest period of stagnation in the history of the USA manufacturing sector.

Bank of America strategists wrote in a report that they expect the Purchasing Managers' Index (PMI) measuring USA manufacturing activity to start rising in April 2025.

Strategists pointed out that there are already some positive indicators in the USA manufacturing sector, such as improved optimism among small businesses, and many manufacturing companies have reported receiving orders for 2025.

Will Trump promote the return of manufacturing to the USA?

In addition, Trump's second term is expected to boost USA manufacturing. Bank of America added that the Trump administration is likely to promote policies that support manufacturing activity, and the trend of bringing businesses back (returning USA companies' production lines from abroad) may also increase in the next four years.

"In the best case, I believe this will greatly boost the earnings of ordinary Stocks, and I think it will become a major driving force for the expansion of the (USA stock) market," Kwon said.

However, despite being Bullish on USA manufacturing, he also expects that cyclical Sectors in the USA stock market, such as financials, consumer discretionary, and materials, will be "more vibrant."

Overall, Bank of America holds an optimistic view on the trajectory of the USA stock market in 2025. The bank expects the S&P 500 Index to close at 6666 points by the end of 2025, which means an increase of about 14% from current levels.

Editor/Jeffy