Nvidia(US:NVDA) Zhi Tong Cai Jing·2025-11-25 12:46Core Viewpoint - The anticipated strong year-end rally in the U.S. stock market, often referred to as the "Christmas rally," is facing uncertainty due to fluctuating expectations regarding Federal Reserve interest rate cuts and ongoing concerns about an "AI bubble" impacting investor sentiment [1][2]. Group 1: Market Performance and Trends - Historically, the S&P 500 index has averaged a 1.5% increase in December since 1945, making it the second-best month after November [1]. - Despite a significant rebound earlier in the week, the S&P 500 index is still projected to decline by 2% this month, marking its first monthly drop since April [2]. - The VIX index, a measure of market volatility, is currently above 20, indicating increased selling pressure in the market [2]. Group 2: Investor Sentiment and Strategies - Investors are showing caution, with demand for options to hedge against declines in major tech stocks like Nvidia and Microsoft reaching its highest level since August 2024 [2]. - Analysts suggest that while seasonal trends typically favor market gains, they are not guaranteed, and current market conditions are being weighed against historical performance [2][3]. - The sentiment among investors is mixed, with some strategists urging caution due to uncertainties surrounding AI investments and potential upward risks in yields [3]. Group 3: Economic Indicators and Predictions - The Federal Reserve's potential interest rate cuts are being closely monitored, with a 70% probability of a cut in the upcoming December meeting [4]. - Concerns about a potential bubble in AI-related investments are growing, particularly following Nvidia's strong earnings report, which led to significant market volatility rather than alleviating fears [4]. - Long-term bullish sentiment remains, with predictions for the S&P 500 index to reach 7400 points by the end of 2026, driven by strong performances from major tech stocks [5]. Group 4: Future Outlook - Morgan Stanley's optimistic forecast suggests the S&P 500 index could rise to 7800 points within the next year, indicating an 18% upside from current levels [6]. - Deutsche Bank is even more bullish, predicting the index could surpass 8000 points by the end of 2026, supported by expected acceleration in U.S. economic growth and broader earnings expansion beyond large-cap tech stocks [6].