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Wall Street anticipates slower S&P 500 (^GSPC) growth in 2025. Zacks Investment Management client portfolio manager Brian Mulberry joins Wealth to share his market outlook.
Mulberry expects markets to return to "normal" in 2025, with returns aligning more closely with earnings growth. He notes that the S&P has grown approximately 45% over the past two years, with much of the potential upside already priced in.
"What that means is, while we expect a good year for earnings growth up around 14%, we only expect muted returns, maybe an 8 to 10% positive year," he tells Yahoo Finance. Mulberry cautions that investors currently have "a false sense of security" regarding 20% returns.
Mulberry projects S&P 500 earnings could reach $280 per share by the end of 2025. However, he identifies a key concern: "Magnificent Seven" stocks account for roughly 70% of that projected growth. While he acknowledges it is "good news" that these are highly profitable companies with strong cash positions, their high contribution to earnings growth presents a risk of disappointment. He warns, "Any type of disruption in that momentum is going to have an outsized impact in terms of volatility."
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For 2025 investment opportunities beyond technology, Mulberry recommends defensive positions in financials, consumer staples, and durables.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
This post was written by Angel Smith