Goldman Sachs: Big Returns Possible for US Stocks Before Year-End
If stock market performance aligns with historical trends, the last two months of the year could deliver significant returns. Since 1928, the $.SPX(.SPX)$ has averaged a 5.2% return from October 27 to December 31. In election years, this average rises to 6.3%. With the upcoming U.S. elections raising concerns on Wall Street, the $Cboe Volatility Index(VIX)$ index has surged.
With only 44 trading days left in 2024, the market is entering a critical sprint. Goldman Sachs' Scott Rubner believes that the S&P 500 will soar beyond 6,000 points by year-end. He asserts that we are entering one of the best fourth-quarter trading periods in nearly a century.
Optimism Amidst Uncertainty
In a report released on October 28, Rubner noted that he received more inquiries over the weekend than at any other time this year.
He cautioned traders about the fear of missing out (FOMO) and stated that October 28 marks the beginning of the best fourth-quarter trading period since 1928, as well as the peak trading period during an election year. Historically, this date has been one of the year's best trading days, coinciding with a nine-day positive seasonal trading trend.
Rubner suggests that the short-term pullback many investors anticipate may not materialize. Instead, he expects the market to continue rising, consistent with seasonal patterns. November and December are typically the strongest months for stock returns.
Election as a Catalyst
The upcoming election on November 5 could act as a "clearing event" for risk assets, potentially heightening investors' FOMO and driving the market upward. Rubner also highlights that overlooked sectors and themes could see the largest gains, as current holdings in these areas are minimal.
Additionally, with the corporate buyback window reopening, this could further bolster stock prices. Goldman Sachs data shows that November is usually the busiest month for corporate buybacks, with historical inflows exceeding $100 billion for just one buyback.
Increased Retail Activity
Rubner observed a resurgence in retail trading activity for popular stocks like $NVIDIA Corp(NVDA)$ $Tesla Motors(TSLA)$. If this trend continues, the number of buyers could rise significantly.
Earlier this month, Rubner expressed concerns about whether a year-end target of 6,000 for the S&P 500 was high enough. Currently, the index needs only a 3% increase to reach that mark.
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