US Stocks Poised for Strong 2025 Performance, BofA Survey Predicts

Following the recent election, a surge in bullish sentiment has pushed investors' US stock exposure to its highest level in 11 years. This bullishness is expected to continue, with a Bank of America fund manager survey predicting that US equities will be the top-performing asset in 2025, reports Markets Insider

The survey, which polled fund managers overseeing a combined $503 billion in assets, indicated a "surge in bulls," according to Bank of America strategist Michael Hartnett. A net 28% of survey participants now expect the US economy to grow at a stronger pace in the next year, a significant shift from last month's survey where 22% predicted weaker growth.

The fund managers are optimistic about the potential for pro-business policies under the new administration, fueling their bullish outlook on US stocks. The survey also highlighted a positive sentiment towards global equities and gold for the upcoming year.

Following the election, investors have shown a strong preference for the Russell 2000 index of smaller stocks, predicting it will be the best-performing index in 2025. This optimism stems from the belief that small-cap stocks, with their limited international exposure, will be less vulnerable to potential risks from proposed tariffs on imports.

Since the election, the Russell 2000 has seen inflows and surged almost 6%, further demonstrating the growing confidence in this sector.

The post-election rally in US stocks has been driven by expectations that proposed policies, such as corporate tax cuts and deregulation, will create a more business-friendly environment, leading to increased earnings. This rally has also sparked significant inflows into "Trump trades" like bitcoin, Tesla, and bank stocks, which are anticipated to benefit from the new administration's policies.

The S&P 500 and the Dow Jones Industrial Average have reached record highs since the election, reflecting the overall bullish sentiment in the US stock market.