今年以来，纳斯达克100指数已经累计涨超了35%。Historically, the U.S. stock market usually performs well in December, especially in the second half of the month, but this year investors seem to be overly enthusiastic, with analysts suggesting that the current gains are overextending future potential.
The Nasdaq has broken the 20,000 point mark, but don't celebrate too early.
On Wednesday, December 11th, Technology Stocks rebounded significantly, with Alphabet and Meta's stock prices reaching an all-time high, pushing the NASDAQ 100 Index to close above 20,000 points for the first time - another milestone moment for US Technology Stocks has arrived.
Since the beginning of this year, the NASDAQ 100 Index has accumulated an increase of over 35%.
Richard Steinberg, Chief Market Analyst at Colony Group, stated:
"Before Christmas, shiny items become even shinier... but I believe the current gains are overextending future potential."
Historically, the US stock market typically performs well in December, especially in the second half of the month, but this year, investors seem to be overly enthusiastic.
According to FactSet data, historically, during the week starting from December 24, the average gain of the S&P 500 Index is 1.3%, while this year, the Nasdaq 100 Index has already increased by 4.3% this month—there are still 20 full days left in December! Steinberg stated:
Any rapid rise in Nasdaq due to speculative behavior at the end of the year will negatively impact market performance in early 2025.
In addition, some Analysts remind that the 20,000-point mark, while an impressive milestone, may lead investors to 'overemphasize' the importance of this number. Callie Cox, Chief Market Strategist at Ritholtz Wealth Management, stated:
The round number makes investors feel better about the future, but the Nasdaq 100 Index breaking through 20,000 points simply reflects the exceptional performance of the Technology Sector.
Now is the time to manage greed.
Despite the high valuations in the US stock market, investor sentiment remains optimistic.
Steinberg stated that this optimism stems from the 'growth-promoting' policies that may be implemented during Trump's second term, such as additional corporate tax cuts. However, Steinberg also cautioned that the Trump administration will bring many risks:
First, those 'growth-promoting' policies are not guaranteed, and therefore US growth stocks may perform mediocrely in the first quarter.
Secondly, the yield on the 10-year Treasury Bonds is currently still at a high level, reporting 4.286% as of the time of writing. Steinberg believes that this may put pressure on growth stocks, and the Trump administration may exacerbate the fiscal deficit.
Finally, Trump's "America First" policy may lead to a stronger dollar, which could put pressure on the earnings of large multinational companies.
Therefore, Steinberg suggests that investors rebalance their portfolios, which are overly weighted towards stocks, to a closer 60/40 ratio of stocks to Bonds.
"Now is the time to manage greed."
