By President Donald Trump sent markets on a rollercoaster this week with his announcement and subsequent delay of tariffs against two of America’s top trading partners.
However, some in the market see the uncertainty and volatility caused by trade worries as a buying opportunity in a year that will ultimately see the economic growth narrative win out and deliver more stellar stock gains.
Investors and economists who spoke to Business Insider said they believed stocks would be propelled by pro-growth tailwinds this year, as well as other ongoing catalysts, like the AI boom. They also expressed doubts that Trump would implement tariffs as severely as he first proposed.
Clark Bellin, the chief investment officer at Bellwether Wealth, thinks stocks are on track to end the year strong. He believes the market could return 9%-12% in 2025, thanks largely to the strength of the US economy.
The job market and economic growth are on solid footing, with the unemployment rate remaining near a record-low last month and GDP expected to accelerate to 2.9% in the current quarter, according to the Atlanta Fed’s latest GDPNow reading.
Inflation, meanwhile, has ticked up but remained relatively tame in December, rising 2.9% year-over-year.
“Inflation isn’t skyrocketing. It’s not necessarily plummeting like people would hoped, but I think the Fed kind of analyzing things and being consciously optimistic and actually achieving their soft landing is pretty good,” Bellin told BI.
He added that his firm had reduced some of its exposure this week to sectors that could be most impacted by tariffs, in order to create “dry powder” on the sidelines.
“If you’ve got a longer-term view, some of these dips taking place are buying opportunities,” Bellin said. “We’re going to continue to watch some of our proprietary indicators and make a strategic decision when we put some of that money back to work.”
José Torres, a senior economist at Interactive Brokers, thinks the market could see another 10% gain in 2025, thanks largely to Trump’s pro-growth policies. That makes each sell-off fueled by Trump’s political moves a possible buy-the-dip moment for investors, he told BI.
“We think stocks are going to go higher,” Torres said, pointing to the president’s plan to slash taxes, loosen regulation, and boost domestic manufacturing. Don’t think that tariff risks are going to derail the really positive domestic momentum that’s likely to occur this year.”
Trump’s proposed tax cuts could boost earnings in the S&P 500 by as much as 20% over the next two years, according to an estimate from Goldman Sachs. Meanwhile, reshoring could add as much as $10 trillion in value to the US economy, given the long-running stagnation in the industrial sector, Morgan Stanley predicted last year.
“I thought it was a good buying opportunity,” Torres added of the volatility this week.
Mark Malek, the chief investment officer of Siebert Financial, also sees more upside in stocks with the AI boom underway.
Big tech firms, for instance, doubled down on their resolve to spend more on artificial intelligence this year. Alphabet said it planned to spend $75 billion on capital expenditures in 2025. Meta has pledged to spend as much as $65 billion on capital expenditures, while Microsoft has earmarked $80 billion for its 2025 fiscal year.
Malek said he believed the market could be propped again up by big gains in the tech sector this year, continuing the streak of tech-driven outperformance since 2023.
“I think from a long-term perspective, I think that the market has room,” he added. “If we look past all the noise we had last week, I think you’re going to see those companies come through.”
Investors have been worried that Trump’s tariffs could stoke inflation and cause interest rates to stay higher for longer, two factors that could weigh on the overall market. But Bellin, Torres, and Malek, each mostly brushed off inflation concerns, as they think it’s unlikely Trump will follow through with tariffs as severe as initially proposed.
The president said he would levy a 25% tariff on goods from Mexico and Canada before delaying the plans by a month.
“I kept thinking as I was looking at these numbers, there’s no way the president is going to go through with these things,” Malek said, speculating the tariffs could be a negotiating tool as Trump defines his trade policy. “There is a huge challenge to the US economy, and why would a president do something that would affect markets so negatively and the US economy so negatively?”
They know that they’re probably not going to, don’t want to have to, implement the tariffs,” Bellin added. “They want to be able to get some leverage points elsewhere.”
