US stocks posted solid gains in January despite the Federal Reserve’s hawkish pivot and escalating geopolitical tensions generating intra-month volatility. The release of DeepSeek’s Artificial Intelligence (“AI”) model created short-term pressure on AI infrastructure stocks; however, we believe it should generate strong tailwinds across the AI landscape in the long term. Strong corporate profits, a healthy US consumer, and a firm labor market support our optimistic view on the economy and markets for 2025; however, escalating trade policy uncertainty will require investors to maintain caution through the year.
