My Stock Market Forecast for 2025
What happens to the S&P 500? January is over, the data is in. Here is how it's looking
Stock markets are down sharply in early morning trading on the back of Trump tariffs: 25% on Canada and Mexico, 10% on China, threats elsewhere. I’m not surprised. This risks a trade war.
We are in for a rocky week.
Today's piece follows on from that of three weeks ago, in case you missed it, which looked at all the January indicators, and I’m sending it out earlier in the week than normal because of its timeliness.
The January barometer - "As goes January, so goes the rest of the year" - is one of the most reliable stock market indicators around. It can have a 90% reliability rating.
When combined with the turn-of-the-year’s other two seasonal indicators - the Santa Claus Rally and the First Five Days - the forecast is even more reliable. Analyst JC Parets calls it the January Trifecta.
It worked brilliantly in 2023, when we got a 25% year in the stock market.
So what are the indicators projecting for 2025?
And can they work when on February 1 President Trump springs tariffs on the world?
Let’s find out.
Here is the S&P 500 in January. It has been a volatile month.
We began at 5,900 and we closed at 6,040, so we have an overall gain of 2.37%.
But along the way, we have had two very large sell-offs.
The first was primarily triggered by a better-than-expected U.S. jobs report, which led to a jump in Treasury yields and concerns that interest rates might not decline as quickly as anticipated.
The second and most recent sell-off in the S&P 500 came as Chinese AI startup DeepSeek, with its low startup costs and energy usage, caused a reassessment of the U.S. tech sector. Nvidia was hit with a record loss in market cap.
Then here we are on the first trading day of February, after Trump announces tariffs on the weekend, and the S&P has given almost all of it back, so we are right back where we started.
Nevertheless, the S&P 500 still closed higher for the month.
Here’s the clinching stat that tells us what we can expect:
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