Markets within reach of new all-time highs!
The S&P 500 index, which reacted positively to the rate cut yesterday in the first hours, pulled back overnight and in the morning and was even more than 0.8% in the red today.
However, once retail was let into the market (from 15:30) sentiment immediately reversed.
The shift was so radical that the leading US index closed today’s session up 0.23% and is literally within reach of a new ATH. The rise was supported both by a looser Fed monetary policy and by the labor market report.
So it looks like this December is well set to fulfill the long-term pattern of year-end gains. Today could have been the start of a Santa Claus Rally, but we’ll have to wait for its full confirmation.
Nice turnaround, but I would still remain cautious. The impact of retail on intraday sentiment is visible, but the long-term trend will be driven mainly by inflation data, the labor market and further Fed commentary after yesterday’s rate cut. S&P 500 is indeed close to an ATH, but December seasonality alone guarantees nothing. If macro data remain stable, a Santa Rally could indeed arrive, but for now it’s only an initial sign, not a confirmed trend.
Hopefully sentiment will be positive now and tech stocks might, for example, reach new all-time highs.
That would of course be great, but so far I don't see much change and stocks are mostly trading sideways.