2025 equity outlook: Five themes based on market history

Key Takeaways

• Near the end of 2024, there are several trends that have been historically bullish for the stock market relative to the bond market.

• Bottom-quartile valuations point to a potential opportunity for financials stocks in 2025.

• Low valuations and relatively fast earnings growth suggest consumer discretionary stocks may outperform in the new year.

• A historically uncommon occurrence suggests utilities stocks may underperform over roughly the next 12 months.

• The combination of earnings acceleration and low relative valuations may be positive for mid cap stocks.