On Tuesday, Canaccord released a statement highlighting the strong performance of the stock market, with both the S&P 500 Index (SPX) and Dow Jones Industrial Average (DJIA) reaching new record highs last Friday.
The S&P 500 Index saw a significant monthly gain of 5.73%, culminating in a year-to-date increase of 26.47%, marking it as the seventh strongest January through November period since 1957. The rally extended beyond large-cap stocks, with the S&P 500 Equal Weight Index (SPW) also achieving a record peak.
The firm emphasized the historical trend of December being a favorable month for stocks, with the S&P 500 Index posting positive returns in December 73.1% of the time since 1957. The analysis of eleven instances where the SPX surged 20% or more in the first eleven months showed that December gains typically improved, with the median performance increasing to 1.96% and the positivity rate rising to 78.6%.
Despite some concerns about overbought conditions in intermediate-term tactical indicators and a move towards high overbought levels in the fastest-moving indicators, Canaccord maintains that the market is not on the verge of a significant correction. The firm's outlook remains positive, citing the conclusion of election uncertainty, the commencement of a Federal Reserve rate cut cycle three months ago, and the historically high positivity rate of December.
In summary, Canaccord has expressed confidence in the continued upward trajectory of the market towards the year's end, backed by historical data and current market conditions. The S&P 500 has had an impressive run so far, and the firm's stance suggests that this trend may persist through December.
In other recent news, Erste Group has revised the Eurozone's 2026 GDP forecast downwards from 1.2% to 1.0% due to the potential impact of US tariffs. The firm also anticipates a cooling in the US economy, with growth slowing to 1.7% in 2025 and further decelerating to 1.5% in 2026. In response to these predictions, Bank of America (NYSE:BAC) analysts suggest a potential 25 basis point reduction in interest rates in December, while Erste expects the European Central Bank to enact an additional interest rate cut in 2025.
Simultaneously, Citi analysts predict a trend toward lower inflation and policy rates in Europe following Trump's second presidential term. This aligns with Goldman Sachs (NYSE:GS)' revised forecast for 30-year conforming mortgage rates to 6% for 2024 and 6.05% for 2025, following a Federal Reserve rate cut.
Moreover, Erste has observed a mild response in the European corporate bond markets to the recent U.S. election results, indicating that monetary policy and the status of European companies are the main drivers at the moment.
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