How to choose US stock ETFs in 2025? Oppenheimer recommends buying the S&P Capital Markets ETF on dips

According to the Zhitong Finance APP, the analyst team from Oppenheimer Asset Management, a top investment institution on Wall Street, recently released a research report suggesting that investors should take advantage of the relatively consolidating or briefly declining period of the "SPDR S&P Capital Markets ETF" (KCE.US) to engage in "buying on dips" before it regains its long-term leadership position in the financial markets in December and even into 2025.

Last Friday, the S&P Capital Markets ETF briefly fell below $144 but quickly rebounded to above $144. On Monday, driven by buying on dips, the ETF closed at $144.950, marking a 45% increase year-to-date, significantly outperforming the S&P 500 index.

Ali Wald, the head of technical analysis at Oppenheimer, stated in a report, "The SPDR S&P Capital Markets ETF remains at the top of our ETF momentum rankings, second only to two popular banking ETFs—KBE and KBWB." "The broad industry advantages demonstrated by the S&P Capital Markets ETF enhance our investment confidence in this ETF."

Regarding the outlook for the U.S. stock market in 2025, Oppenheimer Asset Management stated in the report that driven by strong economic growth in the U.S., the S&P 500 index is expected to rise to a record 7100 points by the end of next year. This forecast for the S&P 500 index in 2025 is currently the "wildest target" among Wall Street peers, exceeding the 7000 points predicted by Deutsche Bank and Yardeni Research, as well as the 7007 points given by the Wells Fargo market strategy team. John Stoltzfus, the chief equity market strategist at Oppenheimer, wrote in the latest report that the fundamentals "indicate that the current resilience of the U.S. economy and stock market seems likely to continue into next year."

Looking ahead to the U.S. stock market in 2025, nearly all Wall Street strategists expect the U.S. stock market to continue rising, marking an "unprecedented" situation where notable institutions collectively hold a bullish outlook on U.S. stocks. Compared to the predictions above 7000 points, the forecasts from Wall Street financial giants such as Morgan Stanley, Goldman Sachs, and JP Morgan appear relatively "conservative," with all three giving a target of 6500 points for the S&P 500 index in 2025.

In contrast, Oppenheimer and a few other Wall Street institutions, including Wells Fargo, Deutsche Bank, and Yardeni Research, expect the S&P 500 index to break through the significant 7000-point mark for the first time in U.S. stock market history by the end of next year.

Oppenheimer's chief market strategist, Stoltzfus, is currently the most optimistic star strategist on Wall Street regarding the 2025 U.S. benchmark index expectations, and he previously raised the target for the S&P 500 index in 2024 to 6200 points in November However, these Wall Street investment institutions mentioned in their research reports that although the overall trend is expected to continue to rise next year, the S&P 500 index may still experience a correction period of about 10% and a relatively short consolidation phase. Such phases are often when the "buy on dips" strategy fully demonstrates its value. This is also the core logic behind Oppenheimer's bullish stance on the S&P Capital Markets ETF and its recommendation for investors to actively "buy on dips."

The S&P Capital Markets ETF aims to track the market performance of the "S&P Capital Markets Select Industry Index." This index represents the "capital markets portion" of the S&P Total Market Index (TMI), focusing comprehensively on financial stocks, covering asset management firms, custodial banks, diversified capital markets, financial market exchanges, as well as investment banks and brokerage firms. The S&P Capital Markets ETF provides U.S. stock investors with broad exposure to the U.S. capital markets, including large-cap, mid-cap, and small-cap financial stocks. Its core holdings include Coinbase (COIN.US), RobinHood (HOOD.US), LPL Financial (LPLA.US), Interactive Brokers (IBKR.US), and Blue Owl Capital (OWL.US), among others.

Regarding the industry investment outlook for 2025, Wall Street is generally optimistic about financial stocks. Not only Oppenheimer, but also well-known Wall Street investment institutions such as Bank of America, Montreal Bank, JP Morgan, and Wells Fargo have expressed optimism about financial stocks. These institutions stated that the catalysts driving bank stocks are very clear: a strong economy, expectations that elected President Trump will relax regulations, attractive valuations, and lower interest rates. Jake Manoukian, head of U.S. investment strategy at JP Morgan Private Bank, stated that his investment team is looking for targets in the financial and asset management sectors for their 2025 investment portfolio.

"It is clear that this administration will be more friendly to Wall Street and trading activities. This enthusiasm has precedents. For a long time, financial stocks have been viewed as the preferred industry during Republican administrations, mainly due to expectations of regulatory relaxation and a more favorable environment for major financial giants and large-scale mergers and acquisitions," said the strategy team led by Manoukian at JP Morgan.

In addition, here are the stocks within the S&P Capital Markets ETF components that Oppenheimer's analysis team has given a "buy" recommendation and have excess return potential:

Coinbase Global (COIN) - This stock is consolidating after a breakout.

Moody's (MCO) - Its bullish consolidation is advancing upwards.

Blue Owl Capital (OWL) - This stock is "continuously moving upwards" after a breakout StepStone Group, Inc. (STEP) - The stock has experienced a tactical pullback, providing a buying opportunity on dips