Wall Street analysts warn: this year's "Christmas rally" may be absent, and investors are buying more downside protection

"Christmas rally" is often one of the most beloved traditions on Wall Street. After Thanksgiving, U.S. stocks tend to rise slowly, volatility decreases, and December often becomes one of the strongest months of the year. However, strategists say that this year, the "Santa Claus" may not make an appearance.

Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets, stated, "I don't know if we will see a 'Christmas rally,' but we will certainly encounter another volatility 'pit,' or a rebound in volatility." She noted that bearish sentiment in the options market has increased, and investors are buying more downside protection.

Omar Aguilar, CEO and Chief Investment Officer of Schwab Asset Management, also sees similar risks brewing beneath the surface. He said on Monday, "We are seeing a lot of dispersion and divergence in many things. After the government shutdown, the arrival of new macro data is not balanced, and there are early signs of rotation among industry leaders." (Jin Shi)