As the year-end approaches, will the "Christmas rally" in the US stock market arrive as scheduled?

According to the Zhitong Finance APP, as the end of the year approaches, investors are beginning to anticipate a Santa Claus Rally in the U.S. stock market in December.

The global research team at Bank of America stated in an investor report: "The Santa Claus Rally is real and often occurs during the last five trading days of December and the first two days of January."

Looking back at history, data compiled by Bank of America shows that since 1928, the probability of an increase in December has reached 74%, with an average return of 1.32% for the month.

Additionally, in December of an election year, market statistics indicate that the probability of an increase rises to 83%, with an average return of 1.51%.

However, when closely examining the Santa Claus Rally, the data suggests that the return in the latter half of the month is typically higher than in the first half.

Bank of America noted: "In December, the return of the S&P 500 index during the last ten trading days of the month is higher than that of the first ten days. The average return of the S&P 500 index in the first ten days of December is only 0.05%, with a probability of increase at 59%. In contrast, the probability of the S&P 500 index increasing during the last ten trading days of December is as high as 72%, with an average return of 1.17%, showing stronger performance."

Rallying to 6200 by Year-End

Goldman Sachs predicts that the rally in the U.S. stock market will drive the S&P 500 index up by 4% by year-end, ultimately closing at 6200 points in 2024.

Scott Rubner, Managing Director at Goldman Sachs, stated in a report to clients that the continued interest of retail investors in stocks and cryptocurrencies will push the stock market higher before the end of the year. Rubner added that as corporate stock buybacks accelerate towards year-end, the stock market may rise further.

Additionally, Goldman Sachs pointed out that in a typical election year, the stock market rally tends to continue into January, only beginning to fade around the inauguration day on January 20. Rubner also wrote in the report that he remains optimistic about the U.S. stock market in 2025.

JPMorgan is also optimistic about the year-end rally. Data from JPMorgan's trading department shows that even after experiencing the strongest rebound since the early days of the internet bubble, there is still room for the S&P 500 index to continue rising before year-end.

The bank's derivatives analysts indicated that the most popular options trades are betting that the U.S. stock market benchmark index will reach between 6200 and 6300 points this month.

Andrew Tyler, Head of Global Market Intelligence, wrote in a report to clients on Monday: "Given the positive macro environment, earnings growth, and the Federal Reserve's continued support for the market, we maintain a strategically bullish outlook before year-end. We believe it is wise to capitalize on market momentum and anticipate lower pullback potential before mid-January next year."