Yahoo Finance

So, the new year has begun and the markets are a bit choppy. Not bad choppiness but maybe the kind that made an investor ensure that she knew where she'd hid her bottle of antacids.

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The major averages were lower in the week that began Dec. 30, 2024, and ended Jan. 3, 2025.

They were down again the next week, the first full week of the year. The Standard & Poor's 500 Index dropped 1.94%. The Dow Jones Industrial Average dropped 1.86%, and the Nasdaq Composite slumped 2.34%

Related: Analyst who correctly predicted 2024 gasoline prices unveils 2025 forecast

Monday and Tuesday were odd. The S&P 500 and Nasdaq were not strutting much. The Dow actually advanced nearly 600 points in two days.

And then came Wednesday and the surprisingly benign Consumer Price Index report for December.

Talk about relief! All three major averages, negative for the year after eight days of trading, exploded as investors and/or their preset computers started to buy. The Dow jumped 703 points, or 1.7%. The S&P 500 ended 1.8% higher. The tech-heavy Nasdaq jumped nearly 2.5%.

Maybe Jerome Powell and the Federal Reserve can cut interest rates two or three times this year.

A harsh market start and then a jump. Now what?

And suddenly all three averages are now positive for the year. And life looks good again after the unease of the past few weeks.

So now what? In the next few weeks, bearish and semi-confident analysts will posit that U.S. markets will be sharply volatile over the next few weeks, or maybe longer. That's as the Trump administration comes in, imposes major tariffs and orders big deportations of undocumented workers and then tries to undo everything the Biden administration did.

Related: Fed members reset interest rate cut forecasts for 2025

Besides, stocks just finished two really good years, and third years after two really good years are weak, these skeptical analysts say.

Actually, the third year after two years of big gains is actually pretty good. It's happened eight times since 1950, according to Carson Group's 2025 Outlook. Only twice has the S&P 500 fallen back the third year: in 1977 and in 2000 — the year the dot.com bubble burst.

Why a key money manager is bullish on the U.S.

Carson, an Omaha money manager with about $50 billion in assets under management, is, in fact, mostly cheery about 2025.

Let's start with five positive forces it sees at work in the economy:

• The economy is growing faster than prepandemic projections the Congressional Budget Office made. Looser regulations expected from the Trump administration will help.

• Productivity is growing 2.6% a year, more than the 1.6% rate seen between 2005 and 2019.

• Income growth is strong and likely to stay that way.

• Most households are in decent financial shape thanks to higher home values and stock gains, either through direct investing or through retirement plans.

• Headline inflation will remain muted, fairly close to the Federal Reserve's 2% target.