Investing.com – In a note to clients issued on Monday, Wells Fargo (NYSE:) has identified ten market forecasts for 2025, covering macroeconomic trends, market movements, technological advances, and geopolitical developments. These insights reflect the bank's expectations for economic performance, industry transformations and investor sentiment for the new year.
1) Wells Fargo analysts believe investors will prioritize organic growth over pricing strategies, as seen in 3Q24 earnings. In response, companies will trim price increases, a subtle but positive development to control inflation.
2The bank expects the consensus forecast for US GDP growth for 2025 to reach the mid-2% by spring, reversing last year's trend in 2024.
“This may help push stocks higher in the first half of 2025, but sets up a 'natural' correction in the summer,” Christopher Harvey and Gary Lebowitz, analysts at Wells Fargo, said in a note.
3) AI breakthroughs are expected with Grok 3 from xAI and Llama 4 from Meta (NASDAQ:), taking advantage of record-breaking GPU clusters three times larger than standard settings. According to analysts, these developments could reignite the AI business and intensify competition between technology giants for large-scale innovations.
4Wells Fargo expects Coinbase (NASDAQ:) to join the market in the first quarter of 2025, reflecting investors' increased risk tolerance and strengthening momentum-driven strategies. This achievement will highlight the growing acceptance of digital assets in key markets.
5A decline in the US budget deficit forecast for 2025, which now stands at $1.89 trillion, is expected as stronger capital gains revenues provide an unexpected boost. This would provide a “favorable contrarian tailwind for Treasuries,” analysts said.
6Wells Fargo expects the United States to apply additional tariffs on Chinese imports, prompting China to take retaliatory action. Although these tensions may initially slow progress, China's accommodative policies may ultimately boost its economy.
These products “ultimately help the commodity complex, causing a sharp reversal in the fortunes of basic materials, which gets worse before it gets better,” the analysts noted.
7Large-cap portfolio managers are expected to see better performance in 2025 as regulatory adjustments lead to a more balanced market, boosting returns for those underweight in large-cap stocks.
8The housing market could rebound in the second half of the year, supported by a drop in 30-year mortgage rates to 5.5%. Lower interest rate volatility and clearer forward guidance from the Fed are expected to boost investor confidence.
9Core inflation is expected to ease from its current level of 3.3%, with consumer demand moderating in the latter half of 2025. Concerns about inflationary pressures resulting from tariffs are expected to dissipate.
10Finally, Wells Fargo analysts believe momentum in Republican voter registration is likely to improve the party's chances of retaining control of Congress in 2026. Notably, active voter registration in Nevada is expected to shift in Republican favor for the first time since 2007.
