U.S. stock market rebounds led by AI sector... 5 signals of year-end rally

Source: BlockMedia Original Title: US stock market rebounds led by AI sector… “Whether there will be a year-end rally hinges on the first week of December” Original Link: The US stock market, which experienced increased volatility throughout November, successfully rebounded at the end of the month, recovering major indices from their declines. In particular, five market indicators — the differentiated flow of AI-related stocks, increased insider buying, and the inflow of foreign capital — are providing hints about the possibility of a year-end rally.

The US stock market in November started off on an unstable note, showing the worst beginning of a month since 2008 during the first five trading days. Concerns over high valuations, a sharp decline in AI-focused stocks, and the Federal Reserve's outlook on interest rate freezes acted as burdens on the market. However, as the month progressed, a rebound gained strength, with both the S&P 500 and the Dow Jones Industrial Average recovering their early losses by the close of trading on the last day of November, the 29th, local time. Notably, the Russell 2000 index saw a weekly increase of 5.5%, marking the largest weekly gain in over a year. However, the tech-heavy Nasdaq declined by 1.8% over the month of November, ending a seven-month streak of gains.

Restructuring of AI Beneficiary Stocks… Divided into 'Team Google' and 'Team OpenAI'

Within the AI sector, the fortunes of different stocks have diverged. Alphabet unveiled its self-developed large language model ( LLM ) 'Gemini 3', leading to the emergence of related stocks. Broadcom was classified under 'Team Google' for its involvement in the design of Alphabet's Tensor Processing Unit ( TPU ), and companies like Celestica, Lumens, and TTM Technologies also showed similar trends.

On the other hand, stocks related to 'Team OpenAI' such as NVIDIA, Microsoft, Oracle, and AMD have performed relatively poorly. In fact, while the S&P 500 index rose by 0.9% on the 26th, NVIDIA fell by 2.6%. This signals a potential change in leadership within the AI sector, indicating that the AI theme could drive the overall market without relying on specific stocks.

December Rate Cut Expectations Rebound…Attention on Fed Officials' Remarks

The possibility of additional interest rate cuts by the Federal Reserve is emerging as a key variable that will determine the direction of the stock market by the end of the year. Following dovish remarks from key figures such as Federal Reserve Board Governor Christopher Waller, expectations for a rate cut in December are reviving in the market. White House economic adviser Kevin Hassett has been mentioned as a candidate for the next Fed chair, lending weight to these expectations.

Paul Stanley, Chief Investment Officer of Granite Bay Asset Management (, assessed that “the Federal Reserve is increasingly likely to preemptively lower interest rates out of concern for a slowdown in the labor market.”

Expanding market participation… reducing the concentration in technology stocks

Concerns were raised about the concentration of the S&P 500's rise among certain large tech stocks by the end of October, but recently, there has been a noticeable rebound among lower market capitalization stocks. The percentage of S&P 500 stocks above their 200-day moving average recorded a low of 47.3% on November 20 and has since turned upward, recently surpassing 54%. This indicates that the breadth of the stock market's rise is widening, coinciding with the recovery of traditionally weak sectors such as healthcare.

Ryan Dietrich, head of research at Carson Group, analyzed that “market participation often moves ahead of prices” and that “the current expansion of gains increases the possibility of further rises in major indices.”

Insider Buying Ratio Surges… Indicates Recovery of Management Trust

The Vickers Index, which tracks the insider buying and selling ratio of companies listed on the New York Stock Exchange, reached an all-time high of 27 in early October, but has recently plunged to a level of 2.5. This indicates that insider purchases of their own company's shares are increasing.

Jasper Helweg, a healthcare insider analyst at Argus Research, stated that “the predictive power of this indicator is limited, but the significant increase in insider buying is a positive signal for the market.” Insiders may sell stocks for various reasons, but buying can be interpreted as an expectation of an increase.

Foreign capital inflow reaches an all-time high… 'Sell America)Sell America(' concerns alleviated

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Despite concerns about foreign sell-offs of U.S. assets following President Donald Trump's tariff policies, the actual trend was the opposite. According to the U.S. Treasury, foreign net purchases of U.S. stocks reached a record high of $646.8 billion), approximately 869 trillion won(, over a 12-month period until October 2024.

Ed Yardeni, president of Yardeni Research, emphasized that “the dollar's weakness this year is a temporary adjustment, and foreigners are still aggressively investing in the U.S. stock market.” This dispels the concerns of 'escaping America' that had persisted since the beginning of the year.

The future direction of the stock market depends on the market reaction in the first week of December. Given the sharp rise during the holiday period with low trading volumes, attention is drawn to whether the upward trend can continue even after the normalization of trading. The internal flow of major tech stocks, the actions of the Federal Reserve, and foreign capital supply are expected to be the key factors determining the market's direction for the time being.