Rick Rieder Sees Upside for Stocks Despite Near-Record Levels
As the S&P 500 inches closer to its historic highs, BlackRock’s Rick Rieder remains optimistic about the market’s path in the latter half of 2025. Speaking at a major investment conference, Rieder highlighted artificial intelligence (AI) as a transformative force that could substantially reduce inflation and propel equities even higher.
AI: The Game-Changer for Inflation and Productivity
Rieder described AI as "the greatest technology revolution ever," predicting it will drive significant productivity gains that offset inflationary pressures. Despite lingering concerns about tariffs imposing one-time costs on businesses, he emphasized that these will not create prolonged inflation challenges.
"My personal view is that inflation is coming way down," Rieder noted, underscoring AI’s role in improving efficiency across industries.
U.S. Economy Positioned to Avoid Recession
Contrary to recession fears, the BlackRock investment chief pointed out that the U.S. economy’s growth is primarily fueled by services—typically less volatile than goods production, which often cycles with economic swings.
This service-driven economy, coupled with anticipated productivity boosts from AI, suggests a resilient growth environment for the remainder of the year.
Stocks Poised to Overcome Macro Headwinds
While the market still faces challenges such as geopolitical tensions in the Middle East and upward pressure on tariffs that may strain the U.S. dollar, Rieder remains confident stocks can navigate these obstacles.
He highlighted the S&P 500’s impressive performance so far in 2025, noting it nearly matched the entire market capitalization of Germany’s DAX index.
Global Investors Eye U.S. Equities as Prime Destination
According to Rieder, international investors are likely to diversify somewhat away from U.S. Treasurys but continue favoring U.S. equities due to their unique growth prospects.
"There’s no other game in town," he summarized, emphasizing the unparalleled appeal of American stocks in the global landscape.
Monetary Policy Outlook: Cautious Rate Cuts Ahead
Looking ahead, Rieder anticipates the Federal Reserve will enact just two rate cuts starting in September, reflecting a measured approach as policymakers assess the tariff impact.
He cautioned some investors may find this pace disappointing, but it aligns with the Fed’s balancing act amid evolving economic conditions.
In sum, BlackRock's fixed income chief envisions a robust equity market buoyed by technological innovation and a resilient U.S. economy, even as uncertainties linger on global and monetary fronts.
