Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

Boosted by Trump's victory and the 25 basis point rate cut by the Federal Reserve, $S&P 500 Index (.SPX.US)$ Last week closed around 6000 points, with a 4.7% increase, marking the largest single-week gain in a year. US small-cap stocks also rose significantly.

During the campaign, Trump proposed a series of commitments including raising tariffs, tax cuts, deregulation, and stricter immigration laws, bringing new expectations and uncertainties to the market. Investors are actively looking for companies and industries that may benefit.

In this context, Goldman Sachs traders expect that after the trading session driven by the US election comes to an end, rotational pressure will continue to be a significant feature of the market, as investors allocate funds to smaller-cap companies and seek opportunities in cyclical/inflation themes.

Inflating currency

The market has already absorbed one of the strongest inflating currency environments in at least 24 years. Goldman Sachs strategists state that positive macroeconomic data and election results together have driven one of the largest monthly inflating currency shifts in asset classes since 2000. In this context, Goldman Sachs is bullish on gold and European bonds.

Goldman Sachs defines the shift of inflating currency by observing assets related to global economic growth (such as high yield bonds) and assets influenced by monetary policy changes (such as government bonds).

Goldman Sachs's basket of inflation stocks has increased by about 7% since the end of September, with the highest weightage being$EMCOR Group (EME.US)$、$Uber Technologies (UBER.US)$And.$United Rentals (URI.US)$.

Goldman Sachs strategists led by Andrea Ferrario stated that during the past 20 years of inflationary periods, it is worthwhile to replace the bond portion of a 60/40 investment portfolio with alternative investments. Strategists are currently bullish on gold and European ​bonds.

They said: "Starting now, we remain bullish on gold, as gold can serve as an important geopolitical risk hedge, and rate cuts by the Federal Reserve and continuous buying by emerging market central banks also bring benefits. We also remain bullish on European ​bonds, as different macroeconomic backgrounds and potential trade tariffs should support further widening of yield differentials between U.S. and German bonds."

Since early October, the spread between 10-year U.S. and 10-year German bonds has widened by approximately 30 basis points.

Since Donald Trump won the election, gold has retreated from its historic highs.

As for the stock market, Goldman Sachs strategists state that as long as rising bond yields are driven by more optimistic economic growth, the stock market should be able to cope with the rise in bond yields. They said: "If real yields (relative to expectations of real GDP growth) start to rise, or if bond yields rise too quickly, the rise in yields may ultimately limit stock gains."

Are small cap stocks and cyclical stocks welcoming spring?

U.S. small cap stocks appear to be in a favorable position. Most of these companies' revenues come from the domestic U.S., and they will benefit from the rise in protectionism. Potential corporate tax cuts will also be helpful.

Trump proposed comprehensive tariffs of 10% to 20% on imported commodities, with tariffs as high as 60% on goods manufactured in China. The prospect of at least some tariffs being implemented has driven the performance of small cap stock benchmarks.$Russell 2000 Index (.RUT.US)$Rose 8.6% last week.

Financial stocks are also seen as in a strong position, as Trump promised to reform regulatory agencies under Biden's leadership to impose stricter banking rules. $Citigroup (C.US)$ 、 $Goldman Sachs (GS.US)$ and $JPMorgan (JPM.US)$ Stocks soared after Trump's victory.

Barclays US stock strategist Venu Krishna said, "The stock market is eager to digest Trump's domestic growth policies through small cap stocks, and hopes to bet on relaxation of regulations through financial and large-cap technology stocks."

Additionally, Barclays' analyst team led by Emmanuel Cau stated that without the challenging catalyst of a soft landing, the resistance to the rise of US stocks, especially cyclical stocks, is minimal. Historical experience shows that these assets typically rebound steadily as long as there is no recession after the Fed's rate-cutting cycle.

Editor / jayden