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[Animated glitches containing various letters flip to spell out the following financial terms]
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Bear Market
Business Cycle
Risks
Bull Market
Fixed Income
Inflation
Equities
Diversification
Interest Rates
Opportunities
Geopolitics
Market Catalysts
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Please read important information at the end of this program. Recorded on 03/06/2025.
[Marci McGregor speaking throughout]
Headlines often move markets — for a while.
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Marci McGregor
Head of Portfolio Strategy
Chief Investment Office
Merrill and Bank of America Private Bank
News about new tariffs or higher-than-expected inflation can rattle investors, and temporary selloffs may follow. Volatility can last for days, weeks or even longer. Yet there are several reasons why investors would do well to try to tune out the noise of alarming headlines. Over longer periods, market fundamentals have a way of reasserting themselves, which is why it makes sense to focus on trendlines, not the headlines, when volatility heats up.
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Focus on trendlines, not headlines, when volatility heats up.
That doesn't mean you should ignore the headlines. They do matter, especially when they point to important economic or market shifts. But, at the same time, it's good to keep in mind that they often obscure key trends emerging beneath the surface.
Right now, for instance, global economic activity is rebounding. Solid U.S. consumer spending and strong capital spending point to an economy driven by rising activity in both services and manufacturing. And unemployment is still relatively low.
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Strong activity in the services and manufacturing sectors is driving the U.S. economy.
U.S. earnings growth is accelerating. After stronger-than-expected 2024 fourth-quarter earnings, CIO is forecasting a 14% increase in 2025 — and all 11 sectors of the S&P 500 are projected to post positive earnings growth.Footnote 1,2,3
The long-anticipated market rotation, or broadening of the market, is finally happening. Early this year, consumer staples and healthcare were leading the S&P 500, outperforming technology and the Magnificent Seven.
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Magnificent Seven: Apple, Amazon, Alphabet, Nvidia, Meta, Microsoft and Tesla
Finally, we have seen surprising strength in Europe and China. After years of underperformance, both have produced gains well ahead of the U.S. so far this year.
So, when you read headlines about tariffs, or inflation, or global tensions and see heightened volatility impacting your investments, remember: Over the long haul, headlines don't drive markets. Fundamentals and key trends do, and right now, many of those are moving in a positive direction.
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Many market fundamentals and key trends are moving in a positive direction.
Thanks for watching, and that's the Market Decode.
On-screen disclaimers:
Important Disclosures
Footnote 1 Source: Institute for Supply Management. Data released for January as of February 2025.
Footnote 2 Apple, Amazon, Alphabet, Nvidia, Meta, Microsoft and Tesla.
Footnote 3 Merrill and Bank of America Private Bank, Capital Market Outlook, February 24, 2025.
The opinions expressed are as of March 6, 2025 and are subject to change.
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[End of transcript]
The daily onslaught of news about tariffs, inflation, global tensions and more is enough to rattle the savviest investor. When that happens and the markets get choppy, a little perspective can help. Look beyond the headline noise competing for your attention, suggests Marci McGregor, head of Portfolio Strategy, Chief Investment Office (CIO), Merrill and Bank of America Private Bank. "Over the long haul, headlines don't drive markets. Fundamentals and key trends do, and right now, many of those are moving in a positive direction."
In the video above, McGregor highlights several encouraging economic trends and key indicators to consider as you manage your investments.