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%.

This week, as us inflation data accelerated, Donald Trump threatened to impose aggressive tariffs on some of the usa's neighboring countries, while half of Wall Street's investors are on vacation, but the s&p 500 index still easily outperformed Europe and asia's benchmark stock indices. Whether on the sell side or buy side, major institutions, from ubs group to fidelity international, believe that the usa capital markets will continue to dominate the global market in 2025.

Since 1997, us large cap stocks are nearing their best performance year relative to other parts of the globe. Despite high interest rates, us companies are borrowing exceptionally easily. Day traders are enjoying historic gains from speculative bets on leveraged etfs to cryptos.

During the holiday week with shortened trading days, the outstanding performance of the usa market was once again evident, with market activity still abundant. First, investors responded positively to president-elect Trump's announcement of his treasury secretary plan. Just a few days later, his tariff threats triggered market volatility, and the potential inflation indicators favored by the federal reserve subsequently rose in October.

The s&p 500 index rose 1.1% this week, while the cboe global markets volatility index (VIX) measuring hedging demand fell to a four-month low. The yield on 10-year us treasuries decreased by 22 basis points.

In contrast, French bonds were obvious losers in the face of domestic political turmoil, with yields relative to similar German bonds once rising to the highest level since 2012. The stoxx europe 600 index only rose 0.4% at the close this week, while the morgan stanley capital international asia pacific index rose 0.8%.

Data compiled by barclays' EPFR shows that despite the widening valuation gap between us assets and the rest of the world, funds inflowing into us stocks are still accelerating over the past month, while Europe and emerging markets have seen outflows.

Fidelity international portfolio manager Caroline Shaw stated on Wednesday: "From a bird's-eye view, we are more inclined towards the USA." "Earnings growth will remain strong."

Since the pandemic, the economic growth rate of the USA has outpaced that of other developed countries. The optimism that this trend will continue is pervasive, stemming from Trump's policies that will boost the domestic market, while his trade protectionism will harm other parts of the world. Although economists have raised their forecasts for the USA's economic growth next year, predictions for Europe have been downgraded.

"Extremely disconnected"

Despite the currently strong performance of the USA market, whether this strength can be sustained and withstand any negative consequences of its policies remains to be seen. Adam Slater from Oxford Economics wrote this week that if "the USA imposes significant tariffs and faces massive retaliation," the market's optimism may be premature.

Meanwhile, as global central banks re-enter a loosening mode, Invesco expects Europe to outperform the USA, as Europe has lower valuations and higher weights in cyclical industries. Bank of America strategists indicate that the "extreme disconnection" between bullish US assets and bearish views of other parts of the world could lead to poor performance for the USA.

However, bullish bets on US stocks continue to win over and over again, proving that the high valuations of US stocks have not hindered further upside. In the 15 years since the global financial crisis broke out, US stocks have outperformed those in other parts of the world, except for two years. Barclays stated that this has caused its weight in the Morgan Stanley Capital International World Index (MSCI World Index) to reach an all-time high, while Europe's weight has hit a historical low.

Ben Kumar, head of equity strategy at Seven Investment Management, stated: "If other companies in the S&P 500 start earning as much or relatively as much as the large technology companies, then the valuation of the US market will soon start to look reasonable." "There is definitely a sense now that you must hold US assets because it is doing something different."

For UBS Group, there are significant reasons to expect that US stocks will further outperform other regions next year, based on potential reasons such as possible tax cuts to deregulation. A team led by Andrew Garthwaite wrote: "Among all major markets, the USA has the lowest operational leverage, so if global economic growth slows, the USA will perform better." "The USA will benefit relative to elsewhere from Trump."

Editor / jayden