Goldman Sachs’ top technical strategist said that the S&P 500 index is set for a “Santa rally” in the last few trading sessions of 2025. This is because of Donald Trump’s win in the November elections, the possibility of interest rate cuts, and record-highs in capital coming into U.S. stock markets.
For the past nine weeks, a record $186 billion has flowed into U.S. stock markets. This is because of the rush of capital into American stocks after Trump’s election win on November 5. Goldman analyst Scott Rubner wrote this note.
The record-high inflows have helped drive up the stock prices of the “Magnificent Seven” tech giants even more. These megacap tech companies now make up a record 33% of the S&P 500’s total market capitalisation.
Rubner pointed out that if you put $1 into the S&P 500 ETF in your 401(k), 33 cents go into the top 7 stocks, which is a record high.
The money coming in has raised the value of assets that are passively handled to a record high of $11.773 trillion.
The S&P 500 index is set for a “Santa rally” in the last few trading days of 2024, according to Rubner. This is because markets now think it is 97% likely that the U.S. Federal Reserve will cut interest rates at its next meeting in December.
The “Magnificent Seven” MAGS -0.09% are up 50% so far this year, while the S&P 500 SPX -0.00% average is up 28% so far this year. This is after a great run over the last 10 days.
To Rubner, it looks like the 2024 gathering will now go on into 2025. Someone from Goldman Sachs said, “My SPX 5K has been retired, my SPX 6K hat has been tossed, and my SPX 7K has been ordered.”
The Goldman expert also said that the rise would likely be helped by U.S. companies buying back $1 trillion worth of shares, which is allowed to happen until 2025. He said that the rise would go even further if more money came into stocks because of less volatility.
