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The Federal Reserve expects two rate cuts in 2025 which initially fueled a sell-off as investors digest rates staying higher for longer. State Street macro multi-asset strategist Cayla Seder and Citizens Wealth chief investment officer Michael Hans join Seana Smith and Madison Mills on Catalysts to discuss how the Fed's outlook affects their expectations for the market in 2025.
Seder says the selloff is "a really good reminder that, when we look at equity markets, we really need to look at high-quality growth parts of the market." She notes, "Moving into 2025... we're still going to see tech outperform, and we're not really going to see a broadening out, which is something that has been a question as the Fed entered its cutting cycle. I think there is a lot of the market that was looking for outperformance of small caps or outperformance of even some parts of value."
Hans notes that, while the near-term market reaction will likely favor high-quality growth stocks, "it's going to be the [economic] data and the incoming administration and their policy that's going to dictate 2025 and beyond."
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Watch the video above to learn more about how the Fed's expectations for 2025 shape the strategists' market outlooks.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Naomi Buchanan.