Despite volatility, Minnesota investment pros still think stock markets will grow this year

President Donald Trump's rapid-fire efforts to reshape the federal government, from its size to immigration, regulation and foreign policy, has contributed to increased volatility and some deep drops in the stock markets' values.

With many Americans' retirement savings tied directly to markets, the rollercoaster has upset many, with some investment houses lowering their projections for the year.

But others are sticking with year-end predictions, many of which included caution of turbulence.

Carol Schleif, Minneapolis-based chief market strategist of BMO Private Wealth, summed up her view of the rest of the year in a note to her clients: "nauseously optimistic."

Schleif was one of a half-dozen top investment professionals who gathered in December for the Star Tribune's Investors Roundtable. At the time, she predicted the S&P 500 index would end the year at 6,900, up from 5,920 at the end of 2024.

"It's a little early for me to want to change, but it could be tough getting there if policy doesn't settle soon," Schleif said.

Other Investors Roundtable participants also are, at least for now, sticking with their S&P forecasts, which ranged from 6,460 to 7,300. At the time of the meeting, that equated to 6.2% to 20% growth.

For Schleif, the largest surprise of the Trump administration was the fast and far-reaching cuts made by Elon Musk's Department of Government Efficiency, or DOGE.

It may take time for investors and the public to adjust, or readjust, to the public way in which the Trump administration communicates, which is in stark contrast to previous administrations, other participants said.

"We all expected chaos when the Trump administration came into power," said Ben Marks, founder and chief investment officer or Marks Group Wealth Management. "I think eventually investors will become more callous and less reactive to Trump's erratic news flow."

That means sticking to fundamentals, said Marks, who predicted the S&P would increase to 7,300 this year.

"Do not overreact to the erratic news flow from Washington or allow it to change your long-term investment strategies," Marks said. "Certainly, don't try to trade it."

David Royal, chief investment officer for Thrivent, had the most conservative estimate in December at 6,460 and is still comfortable with his prediction.

The forecast included "a significant increase in volatility," said Royal, also Thrivent's chief financial officer. "That prediction has held up well through the first 10 weeks of the year."

Royal did say while it's important to stick to long-term plans, "rebalancing to that long-term allocation becomes even more important in periods of volatility, which can push investors further from their targets."

Most participants predicted slower stock market growth in 2025 than the 20% returns of the previous two years, including Craig Johnson, chief market technician at Piper Sandler. Johnson also had one of the more conservative predictions for the S&P 500 at 6,600.

"The third year of a bull market is typically not as constructive," said Johnson, though he's still comfortable with his prediction.

Johnson also pointed to one of his predictions from the December session: that the market-leading technology stocks powering returns the last few years were set for a pullback.

"I am correct that the Mag Seven [tech stocks] would the the Lag Seven," Johnson said.

He also thinks the market might be close to another turning point.

"I think the market has already discounted a lot of negative news," Johnson said. "I think this market can find a relief rally."

He suggests checking in with a financial adviser who can help capitalize on any rally.

Like the other Investors Roundtable participants, Roger Sit has been surprised at the pace of change by Trump and his administration.

"Has he moved far quicker than I thought? Yes. Would I have done it this way in an ideal world? No," said Sit, CEO and chief investment officer at Sit Investment Associates, who predicted the S&P would end 2025 at 6,500.

Because of the pace, Sit also advises investors to look longer term.

"If you are going to focus day to day, you are going to get whipsawed by the news," Sit said. Instead, he recommends checking investments once a quarter and at least twice a year — or if you experience a large life event like getting married, having children or retiring.

Sit also said he doesn't think Trump's aggressive stance on tariffs and other policies means the president has abandoned the stock market as a measure of success — one Trump often pointed to during his first term.

"I think he always uses the stock market as a gauge, because the stock market is a gauge of the economy," Sit said. "The strength of the economy leads to corporate profits, and strong corporate profits leads to up markets."