Advisors See Further Running of the Bulls in ‘25 — Evening Brief – 12.02.24
Most financial advisors expect the S&P 500 to be up 10% or more by the end of 2025 compared to where it was between November 6-13, 2024, according to a recent survey by InspereX in partnership with Red Zone Marketing.
The survey revealed that 67% expect the S&P 500 to be up 10%, while 14% expect the index to rally 20%. Meanwhile, just 2% and 10% expect the S&P 500 to be up more than 20% or flat, respectively. A small minority (7%) anticipate a decline of 10% or more by year-end. The majority (69%) of advisors believe equities will be the top performing asset class in 2025 followed by cryptocurrencies at 11%.
InspereX said “the bull won’t be easy to ride,” with 80% of advisors expecting to see at least a 10% correction. More specifically, 33% see a drop of 10%, 31% forecast a drop of 15%, and 16% see a bear market (defined as at least a 20% selloff) at some point during the year. But 20% of advisors expressed extreme confidence saying the market won’t see a downturn in 2025.
To prepare for a possible sharp decline, 72% of advisors said they will “probably or definitely” add more downside protection strategies to client portfolios next year.
“Advisors are certainly bullish but many of their upside expectations are more in line with historical averages,” said Chris Mee, managing director of InspereX. Combine that with forecasts of high volatility with at least one correction or worse, and that means investors will need to tough out uncertainty to benefit from returns that may be harder to attain.”
The Federal Reserve’s future monetary policy decisions and the direction of the U.S. economy are top of mind for most advisors. More than two-thirds (68%) of advisors expect the central bank will cut interest two or three times in 2025, while 10% expect four or more cuts and 5% expect the Fed to remain neutral. Just 2% expect one or more rate hikes.
As for how the Fed’s decisions play out for the economy, 46% of advisors believe the Fed will “eventually” achieve a soft landing while 25% expect a no landing scenario and 22% believe the Fed has already achieved a soft landing. Just 7% expect a hard landing.
Geopolitics ranks the highest (31%) in terms of worries for advisors, with inflation not far behind at 27%. The incoming U.S. administration ranks fourth at 11%. For advisors’ clients, inflation is at the top of the list at 35%.
Asked to gauge their clients’ levels of anxiety toward investing right now on a scale of 1-10 with 10 the highest, the average was 5.1, down from 6, which has consistently been the average since June 2022, according to InspereX.
The 682 financial advisors responding work at independent broker/dealers, RIAs, banks, regional firms and wirehouses.