US stocks have been going gangbusters.

In the year to date, the S&P 500 Index (SP: INX) has risen by an extraordinary 28.28%.

The tech-heavy Nasdaq Composite Index (NASDAQ: IXIC) has done even better, rising 35.68%.

These amazing gains have been reflected in popular ASX ETFs like the iShares S&P 500 AUD ETF (ASX: IVV), which has risen 35.72% to $63.23 this year.

The Betashares Nasdaq 100 ETF (ASX: NDQ) has also risen strongly, up 34.76% to $50.36.

Steve Sosnick, chief strategist at Interactive Brokers, told Reuters:

Momentum is the factor that is driving the market.

The market right now is basically a freight train and nobody really wants to get in its way.

Can the momentum in US stocks continue into the new year?

Will US stocks just keep going up?

One of the world's biggest active fund managers, Northern Trust Asset Management, says the run for US stocks is likely to continue in the new year.

Michael Hunstad, Northern Trust's chief investment officer of global equities, says their attitude is 'risk on'.

According to The Australian, Hunstad said:

The overarching picture is very much 'risk on' in our portfolios.

We're very bullish on US equities for a variety of reasons.

The macroeconomic backdrop looks very favourable, economic growth is on our side, inflation is coming down. Earnings expectations are quite positive for the next several years.

Northern Trust is imploring investors to "buy America" in 2025, amid expectations of tech sector deregulation and corporate tax cuts, as promised by incoming US president Donald Trump.

Hunstad expects a stronger US economy and better corporate profits than other regions of the world.

The asset manager's base case for 2025 is a soft landing for the US economy.

The base case assumes no inflationary impact from Trump's tax cuts, deregulation, stricter immigration, and new tariffs.

It also foresees milder but still healthy consumer spending amid a strong jobs market and falling inflation.

However, Hunsatd acknowledges upside risks, including a 'reflation' scenario if tariffs imposed on countries selling goods to America result in higher prices for US consumers.

This would result in the Federal Reserve pausing on interest rates.

However, in the reflation scenario, the net effect of Trump's economic policies would be positive, leading to above-trend economic growth for most of 2025.

Hunstad also sees a downside 'supply restraint' scenario. In this case, reflation would also occur, and tighter immigration and tariffs would cause supply-side disruptions.

This would lead to a recession later in the year and interest rate cuts.

Is it too late to buy the Magnificent Seven?

Hunstad favours large-cap US stocks for the new year amid anticipated strong earnings growth.

He's unperturbed by high valuations for the mega growth companies, including the Magnificent Seven.

The Magnificent Seven US stocks are Nvidia Corp (NASDAQ: NVDA), Microsoft Corp (NASDAQ: MSFT), Meta Platforms Inc (NASDAQ: META), Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), and Tesla Inc (NASDAQ: TSLA).

Hunstad said the current technology and AI boom was nothing like the dotcom bubble of the late 1990s.

Today, the biggest technology companies have among the highest earnings growth, profit margins, capital expenditures and free cash flow generation in the S&P 500 index.

While they also have higher price-to-earnings ratios, we feel these multiples are justified by strong fundamentals.

However, Hunstad does expect the market rally to expand in 2025 to incorporate small-cap US stocks.

He said small-caps had lower valuations and would benefit from economic growth, falling interest rates, and the onshoring of manufacturing as the US seeks to reduce its reliance on China and other nations.

JP Morgan Global Market Strategist Ian Hui said some diversification away from the Mag 7 had already begun, commenting:

The contribution of the seven mega-cap tech-related companies to S&P 500 earnings per share (EPS) growth is decreasing, and their earnings growth rate is slowing, while it is accelerating for the rest of the index.

The rate-cutting cycle and resolution of election-related uncertainties should support a cyclical recovery in areas such as manufacturing, allowing less-favored sectors to benefit from tech-driven growth. This should help reduce concentration and valuation risks at the index level.