Large-cap value stocks will lead market in 2025: BofA strategist

A few big names have led the market (^DJI,^GSPC, ^IXIC) higher in 2024, but as investors consider their strategy for the near year, can these same names lead 2025? Bank of America Securities head of US equity strategy and US quantitative strategy Savita Subramanian sits down with Julie Hyman and Josh Lipton on Market Domination to share her market outlook for 2025 and explain why she believes large-cap value stocks will lead the way. Subramanian's team at BofA currently hold a 6,666 year-end price target for the S&P 500 in 2025. "When you look at the market, the S&P itself is a tale of two stories," Subramanian says," explaining, "You've got this very top-heavy benchmark where there's a few really expensive tech companies that have been leading the market, and then you've got the rest of the S&P 500 where the average stock is trading at, I think, close to the deepest discount we've seen in the history of our data relative to the index." The strategist says she's bullish about the S&P 500 in the long term because "despite the fact that inflation went from negative to 9% to 3%, I mean, you would have thought we'd see some kind of hiccup in margins, but corporates did what they usually do, which is when they realize that things are getting more expensive, they focus on efficiency." Looking to 2025, Subramanian says, "I think we're going to see large-cap value stocks really crush it," outlining that "large-cap value is under the radar." "Think about what's in large-cap value. It's big regulated companies that are going to get a break under a regulatory light administration. That's one thing we know about the red sweep and a Trump 2.0 cycle, the strategist says, highlighting energy, industrials, materials, and real estate as sectors to benefit. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Naomi Buchanan.