Markets, Stock ETFs Can Still Pick Up in Seasonally Strong December Month

“It is a cadre of challenges simultaneously present today which explains why the stock market has been so frustrating,” Jim Paulsen, chief investment strategist at The Leuthold Group, told the WSJ. “At this point, whether you expect a deeper correction or an imminent bear market, the appropriate investment posture is similar—defensive.”

The December seasonal strength has not been fully understood, but some observers argued that companies are averse to releasing bad news during the festive season, which helps Americans maintain their positive mentality. Others believe that ear-end portfolio reshuffling helps fuel a rally as investors adjust their allocations to different markets or take advantage of tax-loss harvesting.

U.S. equities could also pick up if the Federal Reserve decides to take a more wait and see approach later this month, which could slow the pace of interest rate hikes next year.

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