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Wall St Week Ahead-Tax-loss selling, 'Santa rally' could sway U.S. stocks after November melt-up



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By David Randall

NEW YORK, Dec 1(Reuters) -As U.S. stocks sit on hefty gains at the close of a rollercoaster year, investors are eyeing factors that could sway equities in the remaining weeks of 2023, including tax loss selling and the so-called Santa Claus rally.

The key catalyst for stockswill likely continue to bethe expected trajectory of the Federal Reserve's monetary policy. Evidence of cooling economic growth has fueled bets that the U.S. central bank could begin cutting rates as early as the first half of 2024, sparking a rally that has boosted the S&P 500 .SPX19.6% year-to-date and taken the index to a fresh closing high for the year on Friday.

At the same time, seasonal trends have been particularly strong this year. InSeptember, historically the weakest month for stocks, the S&P 500 fell nearly 5%. Stocks swung wildly in October, a month noted for its volatility. The S&P 500 gained nearly 9% gain in November, historically a strong month for the index.

"We've had a solid year, but history shows that December can sometimes move to its own beat," said Sam Stovall, chief investment strategist at CFRA Research in New York.

Investors next week will be watching U.S. employment data, due out on Dec. 8, to see whether economic growth is continuing to level off.

Overall, December has been the second-best month for the S&P 500, with the index up an average of 1.54% for the month since 1945, according to CFRA. It is also the month most likely to post a gain, with the index rising 77% of the time, the firm's data showed.

Research from LPL Financial showed that the second half of December tends to outshine the first part of the month. The S&P 500has gained an average of 1.4% in the second half of December in so-calledSanta Claus rallies, compared with a 0.1% gain in the first half, according to LPL's analysis of market moves going back to 1950.

Stocks that have not performed well, however, may face additional pressure in December from tax loss selling, as investors get rid oflosers to lock in write-offs before year-end. If history is any guide, some of those shares may rebound later in the month and into January as investors return to undervalued names, analysts said.

Since 1986, stocks that were down 10% or more between January and the end of October have beaten the S&P 500 by an average of1.9% over the next three months, according to BofA Global Research. PayPal Holdings, CVS Health, and Kraft Heinz Co are among the stocks the bank recommends buying for a tax-related bounce, BofA noted in a late October report.

"The market advance has been extraordinarily narrow this year, and there's reason to believe that some sectors and stocks will really take it on the chin until they get some relief in January," said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute.

Despite the market's hefty year-to-date rise, investment portfolios arelikely to haveplenty of underperforming stocks. Nearly 72% of the S&P 500's gain has been driven by a cluster of megacap stocks such as Apple, Tesla and Nvidia, which have an outsized weighting in the index, data from S&P Dow Jones Indices showed.

Many other names have languished: The equal-weighted S&P 500, whose performance is not skewed by big tech and growth stocks, is up around 6% in 2023.

Some worry that investor over-exuberance may have already set in after November's big rally, which spurred huge moves in some of the market's more speculative names.

Streaming service company Roku soared 75% in November, for instance, while cryptocurrency firm Coinbase Global climbed 62% and Cathie Wood's ARK Innovation Fund was up 31%, its best performance of any month in the last five years.

Michael Hartnett, chief investment strategist at BofA Global Research, said in a Friday note that the firm's contrarian Bull & Bear indicator - which assesses factors such as hedge fund positioning, equity flows and bond flows - had moved out of the "buy" zone for the first time since mid-October.

"If you caught it, no need to chase it," he wrote of the rally.





Reporting by David Randall; Editing by Ira Iosebashvili and Richard Chang

Wall St Week Ahead runs every Friday. For the daily stock market report, please click .N
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إخلاء المسؤولية: تتيح كيانات XM Group خدمة تنفيذية فقط والدخول إلى منصة تداولنا عبر الإنترنت، مما يسمح للشخص بمشاهدة و/أو استخدام المحتوى المتاح على موقع الويب أو عن طريقه، وهذا المحتوى لا يراد به التغيير أو التوسع عن ذلك. يخضع هذا الدخول والاستخدام دائماً لما يلي: (1) الشروط والأحكام؛ (2) تحذيرات المخاطر؛ (3) إخلاء المسؤولية الكامل. لذلك يُقدم هذا المحتوى على أنه ليس أكثر من معلومات عامة. تحديداً، يرجى الانتباه إلى أن المحتوى المتاح على منصة تداولنا عبر الإنترنت ليس طلباً أو عرضاً لدخول أي معاملات في الأسواق المالية. التداول في أي سوق مالي به مخاطرة عالية برأس مالك.

جميع المواد المنشورة على منصة تداولنا مخصصة للأغراض التعليمية/المعلوماتية فقط ولا تحتوي - ولا ينبغي اعتبار أنها تحتوي - على نصائح أو توصيات مالية أو ضريبية أو تجارية، أو سجلاً لأسعار تداولنا، أو عرضاً أو طلباً لأي معاملة في أي صكوك مالية أو عروض ترويجية مالية لا داعي لها.

أي محتوى تابع للغير بالإضافة إلى المحتوى الذي أعدته XM، مثل الآراء، والأخبار، والأبحاث، والتحليلات والأسعار وغيرها من المعلومات أو روابط مواقع تابعة للغير وواردة في هذا الموقع تُقدم لك "كما هي"، كتعليق عام على السوق ولا تعتبر نصيحة استثمارية. يجب ألا يُفسر أي محتوى على أنه بحث استثماري، وأن تلاحظ وتقبل أن المحتوى غير مُعدٍ وفقاً للمتطلبات القانونية المصممة لتعزيز استقلالية البحث الاستثماري، وبالتالي، فهو بمثابة تواصل تسويقي بموجب القوانين واللوائح ذات الصلة. فضلاً تأكد من أنك قد قرأت وفهمت الإخطار بالبحوث الاستثمارية غير المستقلة والتحذير من مخاطر المعلومات السابقة، والذي يمكنك الاطلاع عليه هنا.

تحذير المخاطر: رأس مالك في خطر. المنتجات التي تستخدم الرافعة قد لا تكون مناسبة للجميع. يرجى الاطلاع على تنبيه المخاطر.