The investor argues the U.S. is emerging from a three-year “stealth recession” and forecasts a productivity-driven economic boom led by innovation-focused companies. She expects falling interest rates, lower inflation, and policy clarity to fuel a broader bull market.

ARK Investment Management CEO Cathie Wood said the U.S. economy is poised to exit a three-year “stealth recession” and enter a productivity-led expansion, with innovation-focused sectors expected to lead a broad-based bull market.

In a note published Wednesday, Wood argued that the Federal Reserve’s aggressive rate-hiking cycle, which began in 2022 and lifted interest rates at a historically fast pace, triggered a prolonged downturn that struck sectors in sequence, including housing, autos, and manufacturing. 

Recent signs of economic weakness in government and high-income consumer segments, which had previously remained resilient, may signal the recession’s conclusion, she wrote.

While some economists expect a broader recession to persist through 2026, Wood anticipates a rebound later this year as monetary, fiscal, and trade policy uncertainty recedes. 

She also pointed to steepening in the U.S. Treasury yield curve—a historically reliable recession indicator—as confirmation that the downturn has already occurred.

Wood expects innovation sectors, particularly those tied to artificial intelligence, robotics, energy storage, blockchain, and genomic sequencing, to drive the next phase of economic growth. 

Cost declines across these platforms are contributing to disinflationary pressures, she noted, citing data from inflation data platform Truflation and ARK's own models.

The ARK founder said a “broader-based bull market” could emerge if current economic and political conditions shift in favor of deregulation, lower interest rates, and reduced trade barriers. 

She contended that current market valuations for innovation-focused companies are near historic lows relative to the broader market.

Wood contrasted today’s investor sentiment with the late 1990s tech boom, saying markets are now undervaluing disruptive technologies despite their increasing real-world adoption.

The ARK Innovation strategy’s adjusted EV/EBITDA multiple has compressed from 278% above the S&P 500 in 2021 to just 13.3% as of March 2025, suggesting deep value territory, according to the firm.

With structural innovation trends accelerating and potential policy tailwinds on the horizon, Wood said investors should not wait for “perfect clarity,” cautioning that doing so may result in missed opportunities.

As of year-to-date 2025, the S&P 500 has fallen 5.2%, the Nasdaq-100 is down 6.8%, and the Dow Jones Industrial Average has shed 4.1%. 

ARK Invest’s flagship innovation ETF (ARKK) has underperformed the broader market with a 10.6% decline, while the ARK Fintech Innovation ETF (ARKF) has outperformed major indexes, edging down just 3.7%.

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