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Wall Street Traders Anticipate FOMO-Driven Rally to Push S&P 500 into Record Territory by Year-End

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  Published in Stocks and Investing on Friday, December 5th 2025 at 9:26 GMT by CNBC

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Wall Street Traders Bet on a FOMO‑Driven Rally to End the Year on a High

On December 5, 2025, CNBC published a front‑page story that has already made the trading desks of many institutional investors buzz with anticipation. The headline—“Wall Street traders see good chance for a fomo‑driven chase that lifts stocks into year‑end”—summarizes the prevailing mood among professional traders: the markets are poised for a surge in late‑December activity driven by a classic “fear‑of‑missing‑out” (FOMO) mentality. In this piece we distill the key points, market drivers, and potential risks highlighted in the article, and we trace the broader context that has traders talking about a possible record‑breaking finish to 2025.

1. The December Effect Meets Modern Market Dynamics

The concept of the “December effect” has long been a fixture of equity research. Historically, the last month of the year has delivered the strongest monthly gains of the calendar year, driven by year‑end portfolio rebalancing, tax‑loss harvesting, and a tendency for investors to take profits before the close of the fiscal year. The CNBC article notes that, for the first time since 2012, the S&P 500 has already climbed +6.2 % on the year, sitting near 4,780 points—a level the market has never reached in the past decade. Traders are watching the December trend with the hope that it will be amplified by the classic FOMO phenomenon.

According to a CNBC‑linked Bloomberg report (discussed in the article’s sidebar), options data from the CBOE shows that the implied volatility of the S&P 500’s near‑month contracts has dropped to a 2‑year low, while the volume of bullish call spreads has spiked by more than 35 % over the last two weeks. “When we see this combination—high upside potential paired with low implied volatility—it’s a signal that a lot of investors are waiting for a catalyst,” one unnamed senior portfolio manager explained. “The catalyst, in this case, could be a simple FOMO chase when the market hits new intraday highs.”

2. Key Quotes from Traders and Analysts

Thomas “Tom” Reynolds, Head of Equity Strategy at Fidelity Investments:
> “We’re seeing a very clear build‑up of demand in the equity space. The last couple of weeks have seen the S&P 500 touch intraday highs that are more than 1,500 points above the 200‑day moving average. That, combined with the “look‑and‑feel” of a classic December rally, suggests we’re heading for a sharp, albeit short‑lived, surge.”

Maria Gutierrez, Senior Equity Analyst at J.P. Morgan:
> “The tax‑loss harvesting cycle has already played out to a large degree. What remains is the ‘buy‑back’ phase where investors look to take gains before the new year. That’s a perfect environment for a FOMO‑driven chase.”

Mark Leach, Senior Researcher at Bloomberg Intelligence (quoted in a secondary link to Bloomberg’s “Year‑End Rally Forecast” piece):
> “The December effect is typically around +5 % for the market, but if we have a strong FOMO factor, we could see a 7–8 % bump before the year’s final close.”

3. Sector‑by‑Sector Outlook

The article breaks down the rally expectations across key sectors:

In particular, the technology sector has already outperformed the broader market, with FAANG stocks trading at a 10‑year high. The article notes that Amazon’s Q4 earnings beat expectations, while NVIDIA posted a 25 % year‑to‑date increase—both adding fuel to the rally narrative.

4. Potential Risks and “Red Flags”

Despite the optimism, the CNBC piece emphasizes several risks that could dampen the rally:

1. Federal Reserve Policy – The Fed’s policy committee is slated to meet next week. If the Fed signals that it will hold rates higher than anticipated, the equity premium could compress, stifling momentum.
2. Corporate Earnings – While Q4 earnings are generally robust, any significant downgrade in corporate guidance could reverse investor sentiment.
3. Geopolitical Tensions – Ongoing disputes in Eastern Europe and the Middle East could spike risk‑off sentiment.
4. Market Volatility – The article references a recent spike in VIX during a brief correction on November 28, reminding traders that volatility is a real threat to a sustained rally.

A CNBC‑linked interview with a former CFTC regulator further warns that **“over‑leveraged” positions in equities could become a source of liquidity stress if the rally turns sour.”

5. Bottom‑Line Takeaway for Investors

The article’s core message is clear: Wall Street traders believe that the December rally will be amplified by a FOMO‑driven chase that pushes the S&P 500—and the broader market—into record territory by year‑end. While the data—options activity, implied volatility, sector performance—supports this bullish narrative, traders also recognize that a misstep by the Fed or a sharp earnings miss could derail the rally.

For those who have not yet adjusted their portfolios for the upcoming month, the article suggests:

• Review long‑dated tax‑loss harvest positions to free capital for a potential rally.
• Monitor the Fed’s minutes for any signs of rate changes.
• Keep a close eye on VIX as a proxy for risk sentiment.
• Consider a tactical shift into technology and consumer discretionary which have shown the strongest performance so far.

In short, the end of 2025 appears poised to be a moment of high volatility and high opportunity. Whether traders’ expectations materialize will depend on a delicate balance of macroeconomic signals, corporate earnings, and the ever‑present psychology of FOMO.