今年以来，纳斯达克100指数已经累计涨超了35%。Historically, the U.S. stock market usually performs well in December, especially in the second half of the month, but this year investors seem to be overly enthusiastic, with analysts suggesting that the current gains are overextending future potential.
The Nasdaq has broken the 20,000 point mark, but don't celebrate too early.
On Wednesday, December 11, Technology stocks rebounded significantly, with Alphabet and Meta reaching all-time highs, pushing the NASDAQ 100 Index to close above 20,000 points for the first time—a landmark moment for USA Technology stocks.
So far this year, the NASDAQ 100 Index has accumulated a rise of over 35%.
Richard Steinberg, Chief Market Analyst at Colony Group, stated:
"Before Christmas, shiny items become even shinier... but I believe the current gains are overextending future potential."
Historically, the US stock market typically performs well in December, especially in the second half of the month, but this year, investors seem to be overly enthusiastic.
According to FactSet data, historically, the average increase of the S&P 500 Index during the week starting from December 24 is 1.3%. This year, the NASDAQ 100 Index has already risen by 4.3% this month—there are still 20 full days left in December! Steinberg stated:
Any rapid increase in the Nasdaq due to speculative behavior at the end of the year will negatively impact market performance in early 2025.
In addition, some Analysts remind that while the 20,000 point milestone is an impressive landmark, investors may 'overestimate' the importance of this number. Callie Cox, Chief Market Strategist at Ritholtz Wealth Management, stated:
Round numbers make investors feel better about the future, but the NASDAQ 100 Index breaking through 20,000 points merely reflects the exceptional performance of the Technology Sector.
Now is the time to manage greed.
Despite the high valuations in the US stock market, investor sentiment remains optimistic.
Steinberg stated that this optimism stems from the 'growth-promoting' policies that may be implemented during Trump's second term, such as additional corporate tax cuts. However, Steinberg also cautioned that the Trump administration will bring many risks:
First of all, those 'growth-promoting' policies are not set in stone, thus growth Stocks in the USA may perform average in the first quarter.
Secondly, the 10-year US Treasury yield is currently at a high level, at 4.286% as of the time of writing. Steinberg believes that this may put pressure on growth Stocks, and that the Trump administration could exacerbate the fiscal deficit.
Lastly, Trump's "America First" policy may lead to a stronger dollar, which could put pressure on the earnings of large multinational companies.
Therefore, Steinberg suggests that investors rebalance their portfolios, which are overly weighted towards Stocks, to a ratio closer to 60/40 of Stocks to Bonds.
"Now is the time to manage greed."
