Morgan Stanley’s Michael Wilson has suggested that December could be a difficult month for US stocks, thereby bringing an end to a powerful November rally. The benchmark S&P 500 index gained almost 9% last month, marking one of its strongest November rallies in a century. The index has gained nearly 20% for the year to date.
According to the Morgan Stanley strategist, December could bring “near-term volatility in both rates and equities”, claiming that the “January effect” could lift stocks once again at the start of the new year. The November rally was heavily spurred on by optimism surrounding interest rates, with investors increasingly expecting the Federal Reserve to cut rates amid signs of a slowing economy and cooling inflation.
Several Wall Street analysts have expressed optimism for stocks next year, with the likes of Bank of America Corp., Deutsche Bank Group AG, and RBC Capital Markets predicting the S&P 500 to reach record highs.