With December so far delivering Scrooge-like returns in an otherwise stellar year for U.S. stocks, investors hope the tail end of 2024 offers some holiday cheer, but warn of potential headwinds.
The market also looks less healthy beneath the surface: Eight of the 11 S&P 500 sectors are in negative territory for December, while the equal-weight S&P 500, a proxy for the average index stock, is down 7%. “We’re ending the year with people finally facing the reality that the stock market is extremely expensive and the Fed is not going to be as accommodative as they had been thinking,” Maley said.
But that seasonal strength may have come early this year, given the S&P 500 posted a blockbuster 5.7% return in November driven by Donald Trump’s Nov. 5 presidential election victory, Carlson said. In another worrisome sign, the percentage of S&P 500 stocks trading above their 200-day moving averages declined to 56% as of Wednesday, a low for the year, according to Adam Turnquist, chief technical strategist for LPL Financial.