In December, the US stock market had a relatively flat return, although $Nasdaq Composite Index (.IXIC.US)$ it broke through the important 20,000-point mark this month, but as of now, it has only increased by 0.8% within the month; $S&P 500 Index (.SPX.US)$ the Index fell by 2.74% during the month, $Dow Jones Industrial Average (.DJI.US)$ and dropped by 5.72%.

Due to concerns that the Federal Reserve may soon end the rate-cutting cycle, the US stock market fell sharply on Wednesday, with the Dow Jones Industrial Average dropping over 2.5%, the Nasdaq Composite Index over 3.5%, and the S&P 500 Index nearly 3%; among them, the Dow Jones experienced a consecutive decline for 10 trading days, setting the longest losing streak since 1974, until it barely rose on Thursday, ending the 10-day losing streak.

However, analysts on Wall Street are not overly concerned and believe that Wednesday's sell-off is a good opportunity to buy the dip, and that a strong reaction to the Federal Reserve meeting is unlikely to disrupt this year's "Santa Claus Rally." The chief market strategist of Carson Group has stated that the trading window for the Santa Claus Rally will officially open next week, which should lead to a year-end rebound for US stocks.

Five reasons to be Bullish on the "Santa Rally."

Historically, during the seven trading days following Christmas, which include the last five trading days of the year and the first two trading days of the new year, investors tend to go long, and US stocks are likely to rise. This seven-day trading period is known as the "Santa Rally."

"Santa Rally" will officially begin next week. Data shows that over the past 70 years, the average ROI for the S&P 500 Index during the Santa Rally period is 1.3%, with nearly 80% chance of rising during these seven trading days.

Data from Bank of America indicates that stock market data going back to 1928 shows that the average gain during the Santa Claus Rally is stronger, reaching 1.6%. The Bank of America report points out that the second half of December is typically the second strongest period for the US stock market during the year, and in presidential election years, the probability of the S&P 500 index rising in December is as high as 83%.

It's worth noting that the S&P 500 index has already accumulated a 26.47% increase in the first 11 months of this year. According to historical data, in the past 10 instances when the S&P 500 index rose at least 20% in the first 11 months of the year, it continued to rise in December 9 times, with an average increase of 2.4% and a probability of rising as high as 90%.

Ryan Detrick, an analyst at Carson Group, stated that this year's holiday season is expected to bring a year-end stock market rebound, with five reasons supporting a Bullish outlook for the stock market at the end of the year.

Is the Federal Reserve a roadblock? Wall Street: Selling is a good opportunity to buy the dip.

On Wednesday local time, although the Federal Reserve cut interest rates by 25 basis points as expected, the dot plot shows that only two rate cuts are expected in 2025, not the three previously expected by the market. After receiving the signal, the market quickly adjusted expectations, forecasting a 32 basis point rate cut in 2025, down from the previous 50 basis points.

This indicates that the Federal Reserve's "hawkish rate cut" path may begin, leading to a significant drop in U.S. stocks that day. As noted by the strategist team led by Banco of America’s Gonzalo Asis, this week's FOMC meeting could become the last hurdle before a Christmas rally in the S&P 500.

However, Wall Street does not seem too worried, as analysts believe that the selling on Wednesday is instead an opportunity to "buy the dip."

• Wedbush: The tech stock sell-off triggered by the Federal Reserve is a "Buy opportunity".

Dan Ives, a well-known Analyst from the American investment bank Wedbush, stated that the Fed's interest rate path will not drive tech stocks in the coming years. The significant sell-off in the stock market on Wednesday due to the Fed's "non-dovish" stance is simply a "buy opportunity." Investors should focus on the two biggest catalysts for the tech industry in 2025: the ongoing development and adoption of AI, and a more favorable regulatory environment that will pave the way for more.mergers and acquisitions.Pave the way.

Analysts expect Washington to introduce a "significant" AI plan next year, which will make. $Microsoft (MSFT.US)$ 、 $Amazon (AMZN.US)$ 、 $Alphabet-A (GOOGL.US)$ / $Alphabet-C (GOOG.US)$ Technology companies are benefiting. AI should also become a major part of the Department of Defense's expenditures, which could become $Palantir (PLTR.US)$ and $Oracle (ORCL.US)$ The company's "main drivers".

Additionally, Wedbush stated that Christmas has already arrived early for the technology sector. When the Federal Trade Commission (FTC) transferred leadership to Andrew Ferguson, a more business-friendly stance may ease regulatory restrictions on the IT industry. $Tesla (TSLA.US)$ This change may also be accelerated among major companies such as Microsoft, Oracle, Amazon, and Alphabet.mergers and acquisitions.。

• Bank of Montreal: Investors have overreacted, and most importantly, the economy remains strong.

Carol Schleif, Chief Investment Officer of the Bank of Montreal Family Office, stated that investors have overreacted, as they were already aware before the meeting that the Federal Reserve might signal a pause in interest rate cuts. The most important thing is that the economy remains strong.

The market seems to have overlooked the times and ways in which Chairman Powell pointed out how strong the economy is. The Federal Reserve has good reasons for slowing down the pace of rate cuts, namely that the strong economy ultimately matters most for Stocks and corporate profits.

• Blackrock: The US stock market can still benefit from AI and other factors.

Jean Boivin, head of Blackrock Investment Institute, stated that the Federal Reserve has poured cold water on the market's hopes for substantial interest rate cuts in 2025. He believes that considering the risks of inflation resurfacing due to potential trade tariffs and the pressures on the labor market from slowed immigration, expecting only two more rate cuts in 2025 now seems reasonable.

However, Jean Boivin mentioned that they anticipated this policy outcome, so it will not change their recent outlook on the US stock market. The US stock market can still benefit from AI and other powerful forces, strong economic growth, and broad earnings growth. They believe the performance of the US stock market will surpass its international peers by 2025.

• Citigroup: Expects Powell and the committee to significantly shift to a dovish stance in the coming months.

Andrew Hollenhorst, chief US economist at Citigroup, stated that once signs of weakness appear in the job market, the hawkish tone of the Federal Reserve may not last long and will instead shift to dovish. In the coming months, ongoing weakness in the job market may become more apparent, leading to rate cuts by the Federal Reserve faster than the market expects. They anticipate that Powell and the committee will significantly turn to a dovish stance in the next few months.

• Goldman Sachs: Disagrees with the view that 'the federal funds rate is close to neutral', still expects three rate cuts next year.

Goldman Sachs Analyst Jan Hatzius and his team released a report stating that Powell leaned dovish at the press conference, mentioning four times that Federal Reserve policy remains 'significantly restrictive', disagreeing with the view that 'the federal funds rate is close to neutral'. However, other officials are more hawkish than expected, and since Trump's administration, it has become increasingly likely that they will restrict the Federal Reserve's rate-cutting space due to risks associated with tariffs.

Goldman Sachs still maintains a more dovish outlook, expecting rate cuts in March, June, and September next year, but it should be noted that the March rate cut needs to be supported by better inflation data or worse employment data.

Additionally, Jamie Cox, managing partner at Harris Financial Group, noted that the market has a very bad habit of overreacting to the Federal Reserve's policy actions. The good news is that the recent sell-off should pave the way for a Christmas rebound next week.

How to position in the US stock market through ETF?

According to data from the "Stock Trader's Almanac", from the Tuesday before Thanksgiving to the second trading day of the New Year, the S&P 500 Index has averaged an increase of about 2.6% since 1950. However, $Russell 2000 Index (.RUT.US)$ the performance has been even better, averaging an increase of 3.3% during the same period since records began in 1979.

Jeffrey Hirsch, editor of the "Stock Trader's Almanac", believes that investors should start buying Small Cap stocks from the Tuesday before this year's Thanksgiving and hold them until January 3, 2025.

So far this year, E-mini Russell 2000 Index it has risen by less than 10%, and some ETFs focused on Small Cap growth— $Vanguard Small-Cap Growth ETF (VBK.US)$ and $iShares Russell 2000 Growth ETF (IWO.US)$ increased by approximately 16.5% and 15% respectively.

If you want to position yourself in advance for the market, investing in US index ETFs might be a simpler choice. There are also a large number of index ETFs available in the US market for investors to choose from, with ETFs linked to the S&P 500 Index. $SPDR S&P 500 ETF (SPY.US)$ 、 $Vanguard S&P 500 ETF (VOO.US)$ and $iShares Core S&P 500 ETF (IVV.US)$ So far this year, SPY, VOO, and IVV have all increased by over 24%, with SPY's asset scale nearing 630 billion USD.

In addition, if looking to invest in leveraged ETFs for the S&P 500,$Proshares Ultra S&P500 (SSO.US)$And$ProShares UltraPro S&P500 ETF (UPRO.US)$and others are also good choices.

Can you easily invest in US stocks without selecting individual stocks? Open Futubull, the Index ETF will help you!

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编辑/jayden