Shares of Nvidia (NVDA) continued to fall on Tuesday after shares fell more than 10% from November’s record close. The chip giant’s shares fell nearly 3% in early trading before bouncing back from mid-session lows.
These moves reflected declines in all three major indexes, which have taken a breather as investors debate what could happen to the U.S. economy in 2025.
“This rally, which has been very dramatic since July, is starting to look a little bit fragile,” James Demmert, chief investment officer at Main Street Research, told Yahoo Finance’s Morning Brief.
“So as we move into 2025, I think investors need to start preparing emotionally for a normal 8% to 12% correction in the markets,” he warned.
Demmert, who said the Federal Reserve is “probably already at neutral rates” and likely won’t need to cut rates much from now on, also addressed market breadth in the new year following the meteoric rise of mega-cap Big Tech. supplies.
According to the latest Bank of America Fund Manager Survey, the long Magnificent 7 is considered the busiest trade, according to 57% of investors surveyed.
“It was one of those Mag 7 markets,” Demmert said. “In 2025, we think these stocks will do well, but other things will also do well or better,” amid more attractive valuations and AI-driven use cases, which are expected to boost earnings.
