Stocks & Investing
Wed, December 10, 2025
Tue, December 9, 2025
U.S. Equity Market Poised for Continued Rally Despite Bearish Narratives
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Published in Stocks and Investing on Tuesday, December 9th 2025 at 23:39 GMT by Seeking Alpha- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Article Summary: “And the Stock Market May Continue to Rise”
Seeking Alpha – December 2025
1. Overview
The Seeking Alpha piece argues that, contrary to many bearish narratives, the U.S. equity market still has room to climb. The author frames the argument around a confluence of macro‑economic signals, corporate‑earnings momentum, and monetary‑policy dynamics that together make a continued rally “not just plausible, but likely.” The tone is optimistic but tempered by an explicit discussion of risks that could dampen the upside.
2. Macro‑Economic Landscape
2.1 Inflation and the Fed’s Policy Path
The article opens by noting that core inflation has now eased to 3.1 % from a peak of 4.8 % last year, a level that sits comfortably below the Fed’s 2 % target. The author cites recent Fed statements that suggest the “normalizing” cycle is now in a more advanced stage, with the next rate hikes likely to be smaller or postponed. This dovetails with the argument that liquidity will remain high enough to support equity valuations.
2.2 Labor Market Resilience
Unemployment has dipped to 3.5 %, the lowest level in two decades. The author links this to “robust demand for labor” that keeps wage growth moderate—another factor that keeps inflation in check while sustaining consumer spending. The article highlights that the labor‑force participation rate has begun to rebound, suggesting more people are looking for jobs, which is a positive signal for the broader economy.
2.3 Growth and GDP Outlook
Recent Q3 GDP data (4.2 % annualized) exceeds most forecasters’ expectations. The article points out that the growth rate has remained largely “anchored by domestic demand” rather than external shocks, which the author argues is a more sustainable driver. A link in the article references a Bloomberg story on the Fed’s “Economic Growth Report” to underscore that the Treasury Department’s forecasts also suggest a “steady pace of expansion.”
3. Corporate Earnings and Valuation Dynamics
3.1 Earnings Momentum
The article underscores that corporate earnings are on track to beat the 2025 consensus by 15 %. A table—drawn from a referenced FactSet dataset—shows that the S&P 500’s earnings‑to‑price ratio (EV/EBITDA) sits near 13x, which the author deems “comfortably within the historical range.” The narrative stresses that high earnings growth has historically been a catalyst for equity rallies, especially when coupled with favorable macro‑economic conditions.
3.2 Sectors poised for Growth
Technology remains a dominant driver, with the author citing AI and cloud‑computing expansions as key tailwinds. The energy sector, however, is highlighted as “turning into a more attractive investment” because of higher commodity prices and the gradual transition to renewable energy infrastructure. The consumer‑discretionary sub‑sector is flagged for its resilience amid rising disposable incomes.
3.3 Valuation Assessment
The article compares current equity valuations to the 2007 pre‑crash levels, noting a 35 % discount in the S&P 500’s P/E ratio. The author argues that this “wide margin of safety” indicates that the market still has upside. A link to a Reuters piece on “Market Valuation Metrics” provides a deeper dive into the cyclicality of valuation multiples and how they often “reset” after a downturn.
4. Market Sentiment and Technical Factors
4.1 Investor Psychology
The article references a recent survey from the American Association of Individual Investors (AAII) showing that 78 % of retail investors feel optimistic about the next 12 months. The author notes that optimism, especially at retail levels, can fuel buying momentum in the short term.
4.2 Technical Support Levels
Using a chart from TradingView (linked in the article), the author points out that the S&P 500 has been trading above its 200‑day moving average for the past six months, a classic bullish signal. The “Bollinger Band” width has narrowed, indicating a potential breakout. These technical observations are used to strengthen the case for a continued rally.
5. Risk Factors and Caveats
While the headline is bullish, the author does not shy away from discussing the potential pitfalls that could halt or reverse the rally:
| Risk | Description | Mitigating Factors |
|---|---|---|
| Rate Hikes | Unexpected Fed tightening could choke liquidity. | Current inflation is trending lower; Fed signals are dovish. |
| Geopolitical Tensions | Escalation between major powers could raise uncertainty. | No significant escalation since the last spike; markets have been resilient. |
| Supply‑Chain Bottlenecks | Persisting bottlenecks could dent manufacturing output. | Recent improvements in logistics and the US government’s infrastructure spending. |
| Earnings Slowdown | A sharp decline in corporate profits would hurt valuations. | Q3 earnings season already outperformed expectations. |
The article ends with a clear acknowledgment that “market sentiment is a double‑edged sword” and that “a correction is always possible.” However, it argues that the macro‑economic and earnings backdrop provides a robust cushion against a severe downturn.
6. Conclusion
The author concludes that, while no one can predict markets with certainty, the convergence of easing inflation, robust growth, solid earnings, and favorable valuation multiples creates an environment where the equity market can continue to rise. The article ends with a call for investors to maintain a diversified portfolio, keep an eye on the Fed’s policy moves, and remain prepared for a possible pullback, but not to overreact to short‑term volatility.
7. Contextual Links and Further Reading
The article weaves in several external references that broaden the narrative:
- Fed’s Monetary Policy Report – Provides an in‑depth view of the Fed’s current stance on inflation and rates.
- Bloomberg on Economic Growth – Offers a statistical view of the U.S. GDP figures mentioned.
- Reuters on Market Valuation Metrics – Gives a global perspective on valuation multiples.
- AAII Investor Sentiment Survey – Highlights retail optimism and its historical correlation with market moves.
- TradingView Technical Chart – Visualizes the S&P 500’s price action relative to key moving averages.
These links serve to substantiate the article’s claims and give readers additional sources for a deeper dive into each topic.
Word Count: Approximately 800 words.
Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/article/4851856-and-the-stock-market-may-continue-to-rise ]
