Wall Street is hoping that December continues its historical track record of proving one of the year’s seasonally strongest months of the year, sparking a stock market turnaround just in time for a year-end rally. Stocks are on pace to close out an uneven month. Although November, like December, is also usually strong, a pullback in major technology names weighed on the major averages this time around. On Friday, the Dow Jones Industrial Average and the S & P 500 ended the month fractionally higher, while the tech-heavy Nasdaq Composite felt the brunt of the decline, falling almost 2%. All three indexes were sharply lower before a late month rebound. But December could bring seasonal tailwinds back to the stock market and return it to all-time highs. Historically, since 1950, it’s the third-best month of the year for the Dow and S & P 500; it’s also the third-best month for the Nasdaq, since 1971, according to the Stock Trader’s Almanac. “We think we go from the perfect storm to, maybe, I can’t say perfect setup, but a better setup,” said Ken Mahoney, CEO of Mahoney Asset Management. The recent weakness, “believe it or not, we feel set this up for a stronger year end rally.” Optimists cite bullish underpinnings supporting the current market. Wall Street is coming off robust third-quarter earnings, with the S & P 500 set to post a blended growth rate of 13%, meaning companies have navigated higher prices and higher tariffs to exceed consensus expectations. And the Federal Reserve is expected to lower rates again in December, giving interest-rate sensitive businesses an added boost. Typical year-end performance anxiety also has the potential to push prices higher, as money managers who have lagged the market come off from the sidelines and put cash to work to try and make one last attempt to boost their portfolios and beat their benchmarks. November’s weakness could also mean the stock market is primed for a bounce, especially given the punishment some of the highest-flying tech names have suffered. Nvidia alone slumped 13% in November. Super Micro Computer was the worst performer in the S & P 500, tumbling 35%. Coinbase dropped 21%. As a result, Mahoney expects the path forward will be more rewarding to stock pickers placing bets on the winners and losers in the AI economy. The investor said he’s been adding back some tech exposure, after building up cash over the fall, in what he considers attractive bets such as Microsoft and AMD . “We are picking up companies that we think are still leaders,” he said. Others are more concerned the recent selloff has further to go. There remains anxiety that highflying artificial intelligence stocks have borrowed too much from the future to justify their valuations today, a potential stumbling block for an overstuffed market. This week, Raymond James’ Javed Mirza, the firm’s managing director for quantitative/technical strategy, said some recently triggered technical indicators point to a “corrective phase” that could drive down the S & P 500 as much as 10% in the next three months. Week ahead calendar All times ET. Monday, Dec. 1 Tuesday, Dec. 2 Earnings: CrowdStrike Holdings Wednesday, Dec. 3 8:30 a.m. Import Prices (September) Earnings: Salesforce , Dollar Tree Thursday, Dec. 4 Earnings: The Cooper Cos. , Ulta Beauty , Hewlett Packard Enterprise , Kroger , Brown-Forman , Fastenal , Hormel Foods , Dollar General Friday, Dec. 5
