A surge in technology stocks pushed the Nasdaq above 20,000 for the first time on Wednesday, with another rise in mega-cap tech stocks providing further impetus for stocks.

Shares of Google parent company Alphabet (GOOGL) and Meta Platforms (META) also reached all-time closing highs, helping the Nasdaq reach another round milestone.

“The bright stuff is getting brighter heading into Christmas (with a strong Nasdaq showing even more strength), but I think we’re robbing Peter to pay Paul,” said Richard Steinberg, chief market strategist at Colony Group.

Historically, U.S. stocks tend to perform well in December, especially in the latter half of the month. However, investors do not seem inclined to wait for the 'Santa Rally' period, which will start on December 24 and last until the second trading day of 2025.

According to FactSet data, since 1969, the S&P 500 index has averaged a gain of 1.3% over these seven trading days, while the Nasdaq has already risen by 4.3% in December.

However, Steinberg believes that 'the returns from the Nasdaq's year-end surge are merely an advance on the gains expected in early 2025.'

Despite U.S. stock valuations being very high and a significant possibility of recording over 20% gains for two consecutive years, investor sentiment remains optimistic until 2025.

Some of the optimism is based on the 'growth-promoting' policies that the Trump administration might implement during its second term, such as additional corporate tax cuts, which are not guaranteed. According to Steinberg, this could lead to weakness in growth stocks in the first quarter.

The 10-year U.S. Treasury yield remains high, and the potential pressure from the new year's 'bond vigilantes' regarding concerns over increased U.S. deficit spending may put pressure on growth stocks. 'Bond vigilantes' refers to those investors who attempt to influence government policy by selling bonds or merely threatening to sell bonds.

Finally, Steinberg noted that as Trump's 'America First' agenda progresses, a stronger dollar could also affect multinational companies' earnings in the coming year. He advised investors to rebalance portfolios that are overly weighted in stocks to bring them closer to the standard 60/40 stock-bond ratio.

Steinberg said: 'It’s time to manage greed.'

Article reposted from: Jinshi Data