UBS: The correction in US stocks is in place, and a year-end rebound is expected

UBS's securities trading department stated that the sell-off in the U.S. stock market may have come to an end, laying the groundwork for a year-end rebound. Last week, the stock market plummeted as investors doubted the prospects of further easing by the Federal Reserve and withdrew from crowded AI trades. The S&P 500 index and the Nasdaq 100 index fell approximately 4% and 7%, respectively, from their all-time highs at the end of October, both dropping near the 100-day moving average.

However, UBS believes that as the benchmark indices find support at this critical technical level, the sell-off by systematic funds has largely subsided, and expectations for a rate cut by the Federal Reserve next month seem to be back on track, the stock market is likely to strengthen in the future.

"Our view is that the current de-risking phase has come to an end," wrote Michael Romano, head of UBS's equity derivatives hedge fund sales, in a report released last Sunday.

Romano expects the S&P 500 index to rise to around 7000 points by the end of the year, believing that the market washout in November has sufficiently reset positions, creating conditions for subsequent gains. This strategist anticipates that the recent pullback may have ushered the market into a special December—momentum stocks are expected to perform strongly (these stocks typically experience rapid and significant price fluctuations). (Jin Shi)