TechFlow news — On December 31, according to Jinshi News, Jim Paulsen, Chief Investment Strategist at The Leuthold Group, released a new research report stating that despite widespread market concerns about an overheating economy, the U.S. economy is more likely to experience an unexpected slowdown in 2025, which could trigger a stock market correction of at least 10%. The report indicates that with bond yields currently around 4.6%, the economic surprise index is expected to fall to -35 in the first quarter, and GDP growth may slow from its current 2.7% to below 2%.
Paulsen analyzed several warning signs, including a deteriorating financial conditions index, a declining number of advancing stocks amid broader market gains, and weak performance in cyclical stocks. He noted that over the past 18 months, two minor declines in the financial conditions index have already triggered significant market corrections, including the stock market pullback in October 2023 and the sharp sell-off among the tech "Magnificent Seven."
Nonetheless, Paulsen believes the bull market could still persist through 2025, but advises investors to increase defensive positioning and closely monitor technology stock trends. He emphasized that the likelihood and extent of a U.S. equity market correction will largely depend on the performance of high-flying tech stocks, as any slowdown in these names could pose systemic risks.
