The resilient US economy continues to defy skeptics as investor optimism remains robust heading into February. Our latest Bear and Bull survey reveals that 58.6% of investors maintain their bullish stance, even as questions swirl around Big Tech’s massive AI investments. The reason behind this optimism? An unstoppable American consumer, whose spending and rise in purchasing power helped the US outpace China’s growth for the third straight year.

• The S&P 500 has demonstrated resilience, climbing in 9 of the past 12 months and gaining 2.7% in January, while the tech-heavy Nasdaq-100 saw a 6.4% surge over the same period.
• The economy demonstrated remarkable strength in Q4 2024, expanding at a 2.3% annualized rate, while consumer spending surged to 4.2% — marking the first consecutive quarters above 3% since 2021.

Forward-looking: The market’s trajectory faces several wildcards — from potential trade barriers to AI investment returns. Wall Street analysts warn that Trump’s 25% tariffs on Mexican and Canadian imports could compress S&P 500 profits by 2.8% if fully implemented. Additionally, these tariffs could add up to two percentage points to inflation, potentially forcing the Fed to maintain higher rates for longer. With Federal Reserve Chair Jerome Powell advocating a measured approach to rate cuts and core PCE inflation ticking up to 2.5% in Q4, investors may need to brace for a more nuanced market environment ahead.