In the volatile stock market, the biggest worry for investors is a potential downside happening in December. As stocks have recently made a strong recovery from the lows of the pandemic, the current environment is a high-risk one.
After the stock market rally of October 2020, investors are bracing themselves for the possibility of a market downturn in December. Since markets tend to suffer in the last weeks of the year, some are expecting a possible pullback during the upcoming month.
This market outlook can be attributed to a number of factors. First of all, investors may be expecting lower returns as a result of the presidential elections. As most polls indicate, Joe Biden has a higher chance of winning the election. This means that investors might be taking a cautious stance, leading to a decline in stock prices.
Furthermore, the economic backdrop is also weak, with the U.S. GDP growth slowing down in the third quarter. Additionally, multiple fiscal stimulus packages have failed to pass in Congress, further contributing to the weak market outlook.
The rise in Covid-19 cases across the U.S. is also making investors cautious. With the pandemic far from over, there is a lot of uncertainty in the air, making it hard to predict the direction of the markets.
Ultimately, December 2020 is shaping up to be a high-risk period and the market could see further declines if the pandemic, presidential elections, and economic uncertainty continue. Investors should continue to be cautious and diversify their investments to limit potential losses. Furthermore, they should also remember that market downturns are often short-term and setting long-term goals can help them through this difficult period.
“High Stakes Ahead: Could December Bring Market Downside?
