Expert gives predictions for stock market in 2025 after Wall Street loses $1TRILLION in one day
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A stock market expert has warned Americans to brace for more turbulence on Wall Street in 2025.
But Bret Kenwell - who spoke to the DailyMail.com after Wall Street shed $1 trillion in value - said that occasional big drops in share prices are healthy, and allows them to keep going up in the long term.
Shares plunged on Monday amid a tech sell-off, with chipmaker Nvidia losing $465 billion in market value - the biggest single-day drop ever.
The panic was driven by Chinese AI startup DeepSeek, which showcased a chatbot it claims rivals leading versions from OpenAI and Google, but at a fraction of the cost.
Stocks rebounded slightly on Tuesday, and Nvidia gained as much as 6 percent in afternoon trading.
'Investor emotions tend to climb as stocks pull back,' Kenwell, US investment analyst at eToro, told DailyMail.com. 'It's in these instances that investors need to rely on data and facts rather than gut instinct and feelings.
'The reality is that stocks do go down during bull markets - and it can be beneficial when they do.'
Over each of the past 50 years, the S&P 500 has typically seen three drops of five per cent or more. The biggest of these so-called corrections has, on average, bee 14 percent.
Wall Street indexes plummeted on Monday amid a major tech sell-off
Bret Kenwell, US Investment Analyst at eToro, warns that investors should be prepared for more turbulence this year - and this can be good for the market
Until the tech sell-off, the stock market had been making significant gains, in part due to optimism around Donald Trump's promise of a pro-growth and pro-business administration.
The S&P 500, which tracks the 500 biggest companies in the US, hit a record high at the end of last week as the so-called 'Trump rally' gathered pace.
This is on the back of remarkable gains for the stock market last year.
It gained over 20 percent in 2024 and also the year before - something not since the late 1990s.
'But even when we look back at 2024 - a year where the S&P 500 hit a record high on more than 50 different occasions and did so in ten out of 12 months - investors endured multiple 4 percent to 5 percent corrections throughout the year and a near-10 percent correction in the third quarter,' Kenwell said.
It faced a similar reality in 2023 as well, he continued, even as the S&P 500 has churned out back-to-back years with gains of more than 20 percent.
'Not only is it normal to have a few 5 percent pullbacks alongside a larger correction of 10 percent to 15 percent, but it's healthy when it happens.
'That's particularly true when the catalysts driving the bull market - like earnings growth and the economy - remain intact.'
Kenwell added that as we navigate through 2025, investors should keep these realities in mind.
However, he noted that it is impossible to predict how many pullbacks to expect this year.
Nvidia CEO Jensen Huang lost $21 billion on Monday due to the stock he holds in the company
The Nasdaq tumbled almost 4 percent in premarket trading on Monday
The stock market had been making significant gains, in part due to optimism around Donald Trump's promise of a pro-growth and pro-business administration
'Mentally, I would be prepared for a 10 percent to 15 percent correction at some point in the next 12 months, along with one or two more 5 percent pullbacks,' he said.
He added that it is speculation and it is hard to plan for these dips.
'Having some cash on the sideline to deploy in these scenarios is nice, but moving to all cash in anticipation of them can backfire.
'Case in point, those who waited for a 10 percent correction in 2024 so they could buy the dip never got a chance to and missed a 23 percent rally in the S&P 500 for the year.'
But if there is one way that investors can prepare - and if there is a lesson to be learnt from Monday's sell-off - it is to ensure there is diversity in their portfolios.
Kenwell noted that diversified portfolios weathered the selloff just fine, with seven of the 11 S&P 500 sectors finishing higher on Monday and with the Dow ending higher on the day.
But portfolios that had too much exposure to semiconductors or used too much leverage had a tough day.
'Diversification can help when there are known events on the horizon - like tech earnings or the Fed - but it can be especially helpful when investors have an unexpected curveball thrown their way, like we saw on Monday,' he said.
Solita Marcelli, Chief Investment Officer Americas for UBS Global, echoed this sentiment.
While she said that AI is here to stay, she argued that the latest developments 'do also show that investment approaches that are too concentrated or overly passive can be risky, as value can quickly shift within the AI ecosystem.'
'An active and diversified approach is a better way to gain exposure to AI, in our view.'
