Goldman Sachs The Markets
Why a “Santa Rally” may be ahead
Nov 15, 2024
As U.S. stocks hit record highs, optimism post-election fuels gains. The potential for a Santa rally is on the table, driven by solid earnings and economic data. Client interest pivots toward financial and energy sectors, while rising interest rates raise questions about stability. Key economic indicators like PCE inflation and non-farm payrolls could influence Federal Reserve strategies. Amidst the serious discussions, there's a fun nod to sports, particularly the Knicks, adding a personal touch to market analysis.
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Quick takeaways
- Post-election optimism and robust corporate earnings are driving the rally in U.S. equities, boosting the potential for a year-end Santa rally.
- Concerns about rising interest rates and inflationary pressures could threaten market gains, making upcoming economic data critical for future trends.
Deep dives
Drivers of the Current Bull Market
Post-election optimism and strong corporate earnings are significant drivers of the recent rally in U.S. equities. Following the elections, recovery in the retail market and a surge in corporate buybacks have notably contributed to this positive momentum. Specifically, the S&P 500's third-quarter earnings per share grew by 8% year-over-year, exceeding expectations. Additionally, approximately $6 billion is being repurchased daily in the U.S. equity market, setting the stage for an unprecedented year in total buybacks.
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