Can the market's momentum continue in 2025?

Sam Stovall, Chief Investment Strategist at CFRA Research, joins TheStreet to discuss where the stock market may be headed in 2025.

Transcript

00:00So, the S&P 500 was up more than 24% in 2023, then up another 23% in 2024.

00:09What does that mean for the momentum in 2025?

00:12You mentioned this inability for a three-peat.

00:16And I'm really thinking about this, especially given the fact that we have not had a meaningful

00:22correction since I don't know when.

00:25Well, you're absolutely right.

00:27We did have two pullbacks last year.

00:30We had a 5.5% and an 8.5% decline.

00:35But yeah, meaningfully, I think we needed something more like a 10-plus percent decline,

00:40but we didn't necessarily need a new bear market.

00:44So nobody has repealed pullbacks, corrections, or bear markets, so we will get one.

00:50The real question is, will it be happening in the coming year?

00:54One of the concerns I have is that traditionally third years of bull markets are pretty challenging.

01:00Of the 11 bull markets since World War II that celebrated their second birthday, three

01:05of them became new bear markets before the year was out.

01:09Two more posted declines, even though not enough to become new bear markets.

01:14And then three additional ones ended up with returns of 6.5% or less.

01:20So a majority of those year twos were, in a sense, unsuccessful.

01:26And so I think that there's a good likelihood that we have a pretty challenging year three.

01:32And we're also starting the year with pretty stretched valuations, in my opinion.

01:36You know, 2024 was the year where the stock market almost went straight up, right?

01:42And so in 2025, what do you think we'll see in terms of volatility?

01:49Will we see more of a choppy year?

01:52I think we probably will end up seeing more of a choppy year.

01:56Historically, the first and the third quarters are relatively flat in terms of price change,

02:01but obviously still maintaining that elevated level of volatility.

02:06The second and fourth quarters tend to be posting higher returns.

02:12Also, in the first year of a president's term in office, we've had 90% of those years in

02:19which there was a decline of 5% or more, and many of them have been above 10%.

02:26So I think volatility is something investors will have to get used to in the year ahead.