S&P 500 Defies Seasonal Trends as Santa Rally Looms Amid Market Uncertainties
The S&P 500's atypical December slump contradicts historical patterns, where the index typically gains 1.4% during the month. Market sentiment remains cautious as the Santa Claus Rally period—spanning the last five trading days of December and first two of January—approaches.
Concerns over stretched tech valuations, AI investment sustainability, and potential yen carry trade unwinds have dampened seasonal optimism. A weakened yen following Bank of Japan policy shifts raises fears of currency interventions that could mirror summer 2024's 6.1% S&P decline.
Despite recent gains fueled by softer inflation data and weakening job market indicators, analysts maintain long-term bullish projections. Wall Street forecasts suggest the S&P 500 could reach 7,600 by 2026, representing 12% upside from current levels, supported by anticipated 15% earnings growth.
