LPL Research Team Releases 2025 Outlook: Pragmatic Optimism

Rhea-AI Summary

LPL Financial has released its 2025 Outlook titled 'Pragmatic Optimism,' providing a comprehensive analysis of economic and market expectations. The report projects a downshift in economic growth through 2025 with slower consumer spending, while maintaining elevated bond yields between 3.75% and 4.25% for the 10-year Treasury.

The outlook anticipates modest stock market gains supported by a stable economy, solid corporate profits, and a more neutral Federal Reserve. Alternative investments, particularly equity market-neutral, global macro, and managed futures strategies, are highlighted as opportunities. The report also expects strong commodity demand driven by infrastructure projects and data center development, with the U.S. dollar maintaining its strength in 2025.

Positive

• Economy remains stronger than expected based on revised income and savings data
• Stable economic conditions expected with solid corporate profits
• Bond yields projected to maintain stability between 3.75-4.25%
• Strong commodity demand anticipated from infrastructure and data center projects
• U.S. dollar expected to maintain strength in 2025

Negative

• Economic growth expected to downshift throughout 2025
• Consumer spending projected to slow from current levels
• 2025 stock market gains likely to be more modest compared to 2024
• potential for positive market surprises due to current pricing

This annual report offers a comprehensive analysis of the economic and market environment, highlighting potential implications for investors and their portfolios

SAN DIEGO, Dec. 10, 2024 (GLOBE NEWSWIRE) -- LPL Financial LLC today released its 2025 Outlook, “Pragmatic Optimism.” Setting the tone for the new year, this report offers a comprehensive analysis of the economic and market environment, highlighting potential implications for investors and their portfolios.

The 2025 Outlook embraces a pragmatic optimism rooted in data-driven insights and a clear-eyed view of the challenges ahead. As 2025 approaches, revised key income and savings data reveal an economy that remains stronger than expected.

“There were some brief economic growth scares in 2024,” said Marc Zabicki, Chief Investment Officer at LPL, “but by and large the broader economy continued to defy expectations and surprised once again with a shift to the upside as stocks resume their strong performance.”

Key Highlights from the 2025 Outlook:

• Steady but Complex Economic Progress: The economy will likely downshift throughout 2025 as consumer spending slows from recent breakneck speeds. On the other hand, the Trump administration could jumpstart the economy with the Federal Reserve watching for signs of inflation increasing, which could lead to a slower pace for interest rate cuts.
• Continued Higher Bond Yields: We expect bond yields to remain elevated, with the 10-year Treasury yield likely to remain between 3.75% and 4.25% in 2025. Over the next 12 months, we see roughly equal upside and downside risks to yields as markets grapple with the true impacts of budget deficits.
• A Measured Approach to Equities: Modest stock market gains are expected in 2025, supported by a stable economy, solid corporate profits, and a more neutral Federal Reserve, as well as some potential deregulation tailwinds. With stocks pricing in a lot of good news, positive surprises may be tougher to come by, so a repeat of the strong market performance in 2024 is unlikely.
• Opportunities in Alternative Investments: Lower interest rates and potential policy shifts will impact markets differently, creating both opportunities and risks. Equity market-neutral, global macro and managed futures strategies are well-positioned to capitalize on increased volatility. Private credit and infrastructure remain attractive, but with some moderation in expectations.
• Commodities and Currencies: Demand for a wide range of commodities will drive new infrastructure projects, and the build-out of data centers is poised to require an abundance of commodities. The U.S. dollar had a very strong 2024 and is expected to be well supported in 2025, thanks to limited downside risk and gradual interest-rate cuts.
  

“As we look ahead to 2025, we remain cautiously optimistic because no market environment is ever permanent, and we recognize constructive long-term technology trends are in place,” Zabicki added. “While growth asset returns are not expected to be as robust as 2024, 2025’s investment environment should prove favorable for investors.”

Important Disclosures

Please see the LPL Financial Research 2025 Outlook for additional description and disclosure.

The opinions, statements and forecasts presented herein are general information only and are not intended to provide specific investment advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Any forward-looking statements including the economic forecasts may not develop as predicted and are subject to change based on future market and other conditions.

All indexes are unmanaged and cannot be invested into directly.

All performance referenced is historical and is no guarantee of future results.

About LPL Financial
LPL Financial Holdings Inc. (Nasdaq: LPLA) is among the fastest growing wealth management firms in the U.S. As a leader in the financial advisor-mediated marketplace, LPL supports more than 28,000 financial advisors and the wealth management practices of approximately 1,200 financial institutions, servicing and custodying approximately $1.7 trillion in brokerage and advisory assets on behalf of 6 million Americans. The firm provides a wide range of advisor affiliation models, investment solutions, fintech tools and practice management services, ensuring that advisors and institutions have the flexibility to choose the business model, services, and technology resources they need to run thriving businesses. For further information about LPL, please visit www.lpl.com.

Securities and Advisory services offered through LPL Financial LLC ("LPL Financial"), a registered investment advisor and broker dealer, member FINRA/SIPC.

LPL Financial and its affiliated companies provide financial services only from the United States.

Throughout this communication, the terms “financial advisors” and “advisors” are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial.

We routinely disclose information that may be important to shareholders in the “Investor Relations” or “Press Releases” section of our website.

Media Contact:
Media.relations@LPLFinancial.com
(402) 740-2047

Tracking # 668291

FAQ

What are LPL Financial's (LPLA) key predictions for the stock market in 2025?

LPL Financial predicts modest stock market gains in 2025, supported by a stable economy, solid corporate profits, and a more neutral Federal Reserve, though gains are expected to be lower than 2024 levels.

What is LPL Financial's (LPLA) forecast for bond yields in 2025?

LPL Financial expects bond yields to remain elevated, with the 10-year Treasury yield projected to stay between 3.75% and 4.25% throughout 2025.

What investment opportunities does LPL Financial (LPLA) identify for 2025?

LPL Financial identifies opportunities in alternative investments, including equity market-neutral, global macro, managed futures strategies, private credit, and infrastructure investments.

What is LPL Financial's (LPLA) outlook for the U.S. dollar in 2025?

LPL Financial expects the U.S. dollar to remain well-supported in 2025, with downside risk and gradual interest-rate cuts.