U.S. stocks have led the stock market in recent years, and strategists at the BlackRock Investment Institute don’t see that story changing in 2025.
“Currently, in all scenarios in the outlook, the platform is leaning towards the US corporate strength scenario, which is another way of calling for American exceptionalism,” Wei Li, chief investment strategist at the BlackRock Investment Institute, said during a media roundtable on Wednesday.
Li cited stronger earnings growth in the U.S. this year and expectations that earnings growth will continue to broaden beyond the “Magnificent Seven” names that have driven the stock market higher over the past two years. This view has been a common refrain over the past month from Wall Street firms offering bullish outlooks for 2025.
“Profits are almost everything when it comes to longer-term stock returns,” Li said, adding that the strongest revisions for next year come from the U.S. and Japan, where BlackRock is also overweight equities.
BlackRock’s call for continued American exceptionalism has resonated with other Wall Street firms during the roundtables on the 2025 outlook.
On Monday, Bank of America senior U.S. economist Aditya Bhave told Yahoo Finance’s Alexandra Canal that the U.S. economy is likely to outperform in 2025. In October, the JPMorgan Asset Management team said it believes the U.S. role in the rise of AI will help the U.S. economy surpass growth. others around the world.
In turn, the company said this will lead to US stocks continuing to dominate globally over the next decade.
“We expect extraordinary earnings growth to settle at still high levels for mega-cap tech, while accelerating again in other parts of the market,” JPMorgan Asset Management chief strategist David Kelly wrote in the 2025 outlook his team.
“This broadening, combined with resilient economic fundamentals, policy tailwinds and secular trends, should support a more inclusive rally in the coming year.”
At the sector level, BlackRock noted on Wednesday that utilities (XLU) should benefit from the broadening of AI trading due to the increased power needs to run AI servers.
All this means that BlackRock is further overweight US equities heading into 2025 and is betting on a “pro-risk” environment in 2025.
“In an environment where there are spirit animals that are poignant, it’s not exactly clear who is going to take away the punch bowl in this environment,” said Jean Boivin, head of BlackRock’s Investment Institute.
