US stocks have defied expectations by rising despite high inflation numbers, with investors focusing on other catalysts. November’s CPI showed a 2.7% increase, outpacing October’s growth and September’s jump. However, instead of slowing down, the S&P 500 saw its best session in months.
Several top strategists believe that price growth could weigh down stocks in 2025 if interest rates stay higher for longer due to tariffs. Inflation remains stubbornly sticky, and the Federal Reserve might not be able to cut rates as much as expected.
Investors are optimistic about the upcoming Trump term, but economists remain divided on the impact of tariffs. Some, like BlackRock’s Rick Rieder, believe that prices could re-accelerate further if tariffs are imposed, while others think they may benefit certain American industries. The consensus is that widespread tariffs lead to softer economic growth and higher prices.
Despite these concerns, major investment firms are almost universally bullish heading into 2025, citing strong economic growth, low unemployment, and tax cuts. However, investors should be wary of the potential impacts of higher inflation on their portfolios and be prepared accordingly.
Source: https://www.businessinsider.com/inflation-tariff-trump-stock-market-outlook-prediction-2025-investing-strategy-2024-12