On Wall Street, a rally that's losing steam

It was touch and go, but the S&P 500 finished November in the green. However, in the near future, equity markets seem to be lacking catalysts to push the rally further.

+0.13%. That's the S&P 500's gain in November. Enough to extend the streak: we are now seven months into a run of gains.

However, November was laborious, with even a pullback of roughly 5% at mid-month, which many thought would bury the streak of positive months.

Third year of bullish market

If we re-run the year's narrative, the early weeks were positive, riding the tail end of 2024 and Donald Trump's reelection.

Then the tariff issue came to weaken the dynamics, until it fully broke on April 2, with the announcement of reciprocal tariffs. In a few sessions the S&P 500 slid into a bear market (20% from peak to trough).

Subsequently, as Donald Trump retreated, as the bill eased for consumers and businesses, and especially as the AI theme became central, stockmarkets quickly erased that painful episode.

And with less than a month left in the year, the tally is more than positive: the S&P 500 has risen by 16% since January 1st. The rise has even reached 22% for the Nasdaq... And this after two years (2023 and 2024) of notable gains.

All priced in?

However, the momentum seems to have faded. To simplify things, the catalysts of the past months - mainly AI and Fed rate cuts - seem to have been exhausted.

Nobody questions the relevance of the AI theme, although it appears to have already paid off given valuation levels. Regarding the Fed, rate cuts are less evident than they seemed a few weeks ago.

Equity markets thus look a bit exhausted at the start of December. This is also evident when you zoom out: the S&P 500 has traded in a 5% range for about three months now.

Nevertheless, professionals remain positive. According to a Reuters poll, the S&P 500 is expected to reach 7,490 points by end-2026 (+11.7%).

Another positive factor is seasonality. Yardeni data show that December is historically the second-best month of the year. Since 1928, the average gain has been +1.27%.

A further positive month would bring the S&P 500 closer to the two longest winning streaks of the last 30 years. Between December 1994 and September 1995, and then between April 2017 and January 2018, the S&P 500 posted 10 consecutive months of gains.