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Market resilience reflects ongoing optimism about artificial intelligence-driven growth and deregulation, the Wharton School economist wrote.
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“However, the tangible economic benefits of AI adoption remain distant, leaving the bullish sector narrative intact for now. A rotation into neglected areas of the market, such as value or small-cap stocks, could materialize in 2025 if regulatory reforms and easing financial conditions create a more favorable backdrop for these non-tech segments,” Siegel said.
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The emeritus finance professor expects the Federal Reserve to make a “hawkish” 25-basis-point cut when it announces its new benchmark interest rate Wednesday. Policymakers may indicate that they prefer only two cuts next year, “and this might jar risk assets,” he said.
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Siegel noted that the economy shows no signs of weakening, despite a recent slight uptick in unemployment.