US stocks have led the equity market in recent years and strategists at BlackRock’s Investment Institute don’t see that narrative changing in 2025.
“Currently, across all the scenarios in the outlook, the platform is gravitating towards the US corporate strength scenario, which is another way of calling for US exceptionalism,” BlackRock Investment Institute chief investment strategist Wei Li said during a media roundtable on Wednesday.
Li cited stronger earnings growth seen in the US this year and the expectation that earnings growth will continue to broaden outside of the “Magnificent Seven” names that have powered the stock market higher over the last two years. This view has been a common refrain from Wall Street firms offering bullish outlooks for 2025 over the last month.
“Earnings is almost everything when it comes to longer-term equity returns,” Li said, adding the strongest revisions for next year have come from the US and Japan, where BlackRock is also overweight equities.
BlackRock’s call for continued US exceptionalism has been echoed at other firms on Wall Street during 2025 outlook roundtables.
On Monday, Bank of America senior US economist Aditya Bhave told Yahoo Finance’s Alexandra Canal the US economy will likely outperform in 2025. In October, the team at JPMorgan Asset Management said it believes the US’s role in the rise of artificial intelligence will help its economy outpace others around the world.
The firm said this will result in US equities continuing to dominate globally over the next decade.
“We expect extraordinary earnings growth will settle at still-elevated levels for mega-cap tech while reaccelerating in other areas of the market,” JPMorgan Asset Management’s chief global strategist David Kelly wrote in his team’s 2025 outlook.
“This broadening, coupled with resilient economic fundamentals, policy tailwinds, and secular trends, should support a more inclusive rally in the year ahead.”
On a sector level, BlackRock noted Wednesday that Utilities (XLU) should be set to benefit from the broadening of the AI trade due to the increased power demands to operate AI servers.
All of this puts BlackRock further overweight US equities headed into 2025 and betting on a “pro-risk” environment in 2025.
“In an environment where there’s spirit animals that are poignant, it’s not clear exactly who’s going to take away the punch bowl in this environment,” said Jean Boivin, the head of BlackRock’s Investment Institute.
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