The Fed can't just be 'data dependent' in 2025 — it needs to be 'policy dependent'

With the Fed's focus on maintaining price stability and potential inflation pressures from new fiscal policies, interest rates may remain high for a prolonged period. Higher interest rates typically lead to lower valuations in the stock market, particularly for growth stocks that rely on lower rates for their valuations. Industries sensitive to rate hikes, such as Real Estate and utilities, may see negative impacts as borrowing costs increase and economic activity slows down.

As the article suggests a potential increase in tariffs and inflation, energy sectors may still perform positively due to higher oil prices prompted by inflation. Energy companies benefit from cost pass-throughs and might well weather the impact of policy changes better than other sectors. Therefore, investment in energy ETFs could yield reasonable returns as inflation rises.