BlackRock's Predictions for US Stock Performance

Overview

Investing.com — BlackRock (NYSE:BLK) anticipates continued growth in US stock performance driven by AI advancements and broader economic growth; however, rising US government debt poses risks.

AI and Market Trends

The BlackRock Investment Institute, part of the $11.5 trillion asset management firm, believes that the benefits of AI will be greater for US equities compared to European markets. Private markets are expected to play a larger role in funding AI-related infrastructure.

> "We stay risk-on … and go further overweight US stocks as the AI theme broadens out," the institute stated in its 2025 outlook.

Economic Growth and Interest Rates

While US economic growth may slow slightly in 2025, BlackRock suggests that the Federal Reserve is unlikely to significantly cut interest rates due to ongoing high inflation, predicting rates will stay near 4%.

Bond Market Considerations

Geopolitical tensions and infrastructure spending may exert pressure on the bond market. Investors are likely to seek higher returns on long-term government bonds due to inflation and budget deficits, potentially raising long-term Treasury yields.

> "We are underweight long-term US Treasuries on both a tactical and strategic horizon… risks to our upbeat view arise from any spike in long-term bond yields," the report warns.

Favorable Sectors

In equities, BlackRock favors technology and healthcare sectors, while also pointing to gold and bitcoin as alternatives to government bonds, providing a hedge against market volatility.