CNBC’s Dominic Chu speaks with Tom Lee, managing associate at Fundstrat, to get his tackle the shares poised for a breakout in 2025. He shares the tendencies and sectors he is watching carefully. Plus, he takes stock-specific questions from Professional subscribers.
The inventory market defied the percentages in 2024 with one more sturdy annual efficiency, and Tom Lee expects that momentum to hold by means of 2025.
The S&P 500 final yr soared 23.3%, marking its second straight yr with an annual acquire of a minimum of 20%. The broad market index acquired off to a robust begin this yr, rising round 3% and hitting contemporary all-time highs.
Lee, a longtime market bull and head of analysis at Fundstrat, suppose’s there’s much more upside forward.
“To me, an important takeaway for the final two years is that firms have confirmed themselves to be very resilient,” Lee advised CNBC’s Dominic Chu within the newest version of Professional Talks, which was filmed earlier this month. “They confronted a gauntlet of challenges since 2019. We had a pandemic that shut the economic system down. We had a provide chain shock, which … created enormous quantities of inflation. We had a [Federal Reserve] elevating charges on the quickest tempo in historical past; and we have had two … main dimension wars which have value trillions.”
“And all through this S&P 500 earnings have outperformed expectations. So I feel the lesson of the final two years was that traders have discovered these firms, particularly the big S&P firms, can produce earnings in a whole lot of environments,” he added.
This yr, Lee sees a number of tailwinds driving shares increased, together with:
- Bettering demographics: “The U.S., prime age workforce is rising and is ready to speed up in its development for the following few years,” he stated.
- Robust stability sheets from many firms as they’ve “gathered a whole lot of capital and have been cautious.”
- Traders are collectively sitting on $7 trillion in money.