December’s rally: Optimism and caution on Wall Street
The first day of December did not wake quietly on Wall Street. Markets sparkled with renewed optimism as investors grew nearly certain the Federal Reserve would finally lower rates. This shift in sentiment added momentum to the gains enjoyed in late November, fuel for the traders eager for a classic Santa Claus rally.
Promise and peril in equal measure
For most of November, US stocks wobbled, especially those in the technology sector. Nvidia, once the darling of the S&P 500, fell more than 13% in a single month. Super Micro Computer, racing ahead only months ago, tumbled 35%, making it the index’s worst performer. It was a volatile ride, punctuated by swift rebounds that kept everyone guessing.
As December began, hope ran high. Ken Mahoney, CEO of Mahoney Asset Management, captured the mood: “I think we’ve gone from the storm to, I’d say, a better setup.” He added that the recent shakeout readied the market for a robust rally into year-end.
Many traders pointed to strong third-quarter earnings, S&P 500 firms clocked up a 13% blended growth rate. Firms navigated rising costs and tariffs to stay ahead of expectations. These numbers, combined with the promise of the Federal Reserve cutting interest rates, only inflamed the appetite for risk.
Yet, uncertainty lingered. Javed Mirza, managing director at Raymond James, signalled caution: “Some of the technical indicators suggest we could see as much as a 10% correction in the S&P 500 in the next three months.” Thus, while hope for a rally persisted, a sense of caution crept behind every bullish statement.
Analysts weigh the Fed’s hand
The Federal Reserve holds enormous sway this month. After stubborn inflation and a sticky labour market cast shadows over summer optimism, officials now hint openly at a December rate cut. Markets show an 85% probability of a quarter-point reduction, expectations not seen in months.
Goldman Sachs’ David Mericle believes the cut is all but certain, stating, “We continue to see a December cut as quite likely.” JP Morgan revised its own forecast, predicting a 0.25 percentage-point reduction on 10th December, a shift that could inject real optimism back into US equities.
Not all share this enthusiasm. Amy Wu Silverman, the head of derivatives strategy at RBC, warned that recent volatility might not fade quickly, especially if the anticipated rate cut does not materialise. “We’ve observed a recent rise in volatility; what indicators will help us determine if this trend will persist into December?” she posed, reflecting the uncertainty across trading desks.
Still, as portfolios shuffle and new bets are placed, one truth remains clear: December’s session will test nerves and convictions. As Mahoney put it, “We are picking companies that we think are leaders.” In a market driven part by optimism, part by anxiety, the winners and losers may be clearer by New Year’s Eve, if not before.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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Table of Contents
The first day of December did not wake quietly on Wall Street. Markets sparkled with renewed optimism as investors grew nearly certain the Federal Reserve would finally lower rates. This shift in sentiment added momentum to the gains enjoyed in late November, fuel for the traders eager for a classic Santa Claus rally.
Promise and peril in equal measure
For most of November, US stocks wobbled, especially those in the technology sector. Nvidia, once the darling of the S&P 500, fell more than 13% in a single month. Super Micro Computer, racing ahead only months ago, tumbled 35%, making it the index’s worst performer. It was a volatile ride, punctuated by swift rebounds that kept everyone guessing.
As December began, hope ran high. Ken Mahoney, CEO of Mahoney Asset Management, captured the mood: “I think we’ve gone from the storm to, I’d say, a better setup.” He added that the recent shakeout readied the market for a robust rally into year-end.
Many traders pointed to strong third-quarter earnings, S&P 500 firms clocked up a 13% blended growth rate. Firms navigated rising costs and tariffs to stay ahead of expectations. These numbers, combined with the promise of the Federal Reserve cutting interest rates, only inflamed the appetite for risk.
Yet, uncertainty lingered. Javed Mirza, managing director at Raymond James, signalled caution: “Some of the technical indicators suggest we could see as much as a 10% correction in the S&P 500 in the next three months.” Thus, while hope for a rally persisted, a sense of caution crept behind every bullish statement.
Analysts weigh the Fed’s hand
The Federal Reserve holds enormous sway this month. After stubborn inflation and a sticky labour market cast shadows over summer optimism, officials now hint openly at a December rate cut. Markets show an 85% probability of a quarter-point reduction, expectations not seen in months.
Goldman Sachs’ David Mericle believes the cut is all but certain, stating, “We continue to see a December cut as quite likely.” JP Morgan revised its own forecast, predicting a 0.25 percentage-point reduction on 10th December, a shift that could inject real optimism back into US equities.
Not all share this enthusiasm. Amy Wu Silverman, the head of derivatives strategy at RBC, warned that recent volatility might not fade quickly, especially if the anticipated rate cut does not materialise. “We’ve observed a recent rise in volatility; what indicators will help us determine if this trend will persist into December?” she posed, reflecting the uncertainty across trading desks.
Still, as portfolios shuffle and new bets are placed, one truth remains clear: December’s session will test nerves and convictions. As Mahoney put it, “We are picking companies that we think are leaders.” In a market driven part by optimism, part by anxiety, the winners and losers may be clearer by New Year’s Eve, if not before.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
Ready to earn on every trade?
Invest in 11,000+ US stocks & ETFs