'I don't know if we'll get that Santa rally': Why Wall Street says December may break from its usual strength

Market Overview - The traditional Santa Claus rally, typically a strong period for stocks in December, may not occur this year due to unusual market conditions [1][6] - The year has been marked by significant volatility and unexpected events, such as the DeepSeek meltdown and President Trump's tariff announcements, leading to a roller-coaster market experience [3][4] Volatility and Market Sentiment - Strategists indicate that the current market cycle is fundamentally different, with AI introducing new levels of disruption and uncertainty [4] - There is an increase in bearish sentiment within the options market, as investors are opting for downside protection rather than relying on seasonal equity strength [5] Sector Discrepancies and Leadership Rotation - There is notable dispersion and discrepancies across various sectors, with macro data arriving unevenly post-government shutdown [7] - The momentum trade is beginning to unwind, particularly affecting megacap tech stocks, which have contributed to both market rallies and pullbacks [8] Catalysts and Fed Rate Expectations - The potential for market catalysts to drive upward movement appears weak, with uncertainty surrounding the impact of a possible Fed rate cut [9] - Expectations regarding Fed rate cuts have fluctuated significantly, influencing stock movements in alignment with the changing outlook [9]