1. Stock Bulls Pray for Merciful End to 2022
- A less hawkish Federal Reserve and encouraging inflation data could unleash a mega-rally in December, which has proved to be a strong month for the stock market over the past 70 years.
- The S&P 500 is up 14% since the end of September and on pace for its best fourth quarter since 1999.
Hope is a powerful thing, it starts revolutions.
And the legions of stock bulls are hoping for a merciful end to what has been a disastrous year, of volatility for equities as the Fed’s realization that inflation wasn’t temporary put an end to the shortest bull market on record.
Stocks have plunged into a bear market as the central bank hiked rates to tame decades-high inflation, only to rebound in October when inflation started to cool with investors hoping for a strong finish to a chaotic year.
A less hawkish Federal Reserve and encouraging inflation data could unleash a mega-rally in December, which has proved to be a strong month for the stock market over the past 70 years.
If the market rebound since mid-October holds through December, the S&P 500 would end an otherwise tumultuous year for global money managers on a high note.
The S&P 500 is up 14% since the end of September and on pace for its best fourth quarter since 1999.
On Wednesday, U.S. Federal Reserve Chairman Jerome Powell provided some optimism by signaling that the central bank will slow the pace of interest-rate increases.
The S&P 500 rallied 3.1% in response to leap over its 200-day moving average for the first time since April, a widely watched technical indicator used to gauge longer-term price trends.
Nevertheless, with all the twists and turns heading into 2023, even bulls may sit on the sidelines until the release of the next key inflation report on December 13.
Few economic announcements have mattered more this year than November’s inflation reading, given the Fed’s aggressive campaign to tamp down soaring prices.
While cooling housing markets, gasoline prices, private payrolls and job openings have stoked a debate on whether equities have bottomed, stocks still face more obstacles as investors wait to see if the index’s January downtrend will be broken.