Happy Tuesday! The stock market loves the holiday season, with December historically delivering strong gains for the S&P 500. Optimism, holiday spending and portfolio adjustments often fuel a year-end rally. Here’s why now might be the best time to scoop up U.S. equities — and how investors can capitalize on the trend. Also, why the Fed might be in the giving mood.

—Josh Enomoto

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MARKET RECAP

Yesterday: Markets rose on Monday, with the Dow and Russell 2000 hitting records, as the Treasury secretary nomination boosted sentiment. Investors await key inflation data, with PCE expected to tick higher but signaling gradual cooling, as the Fed’s rate-cut pace slows.

On Our Radar: Both consumer confidence and new home sales data will come out later this morning, providing a pulse of the real economy. Also, tech player Dell Technologies will release its earnings results following Tuesday’s close.

TOP STORY

'It's The Most Wonderful Time Of The Year' For The Stock Market, History Says

December has historically been one of the best months for the stock market, with the S&P 500 averaging a 1.25% gain. From Thanksgiving through year-end, equities rise 71% of the time, driven by optimism, spending and portfolio adjustments.

Here’s why stocks could rally this holiday season — and how investors can position themselves to profit.

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FIVE ZINGERS

Big Shot: The equities market surged to fresh heights on an intra-day basis on Monday, particularly the small-cap Russell 2000 index. All because the nominee for Treasury secretary has Wall Street buzzing with optimism.

Bronze Star: Despite political shifts, electric vehicles will likely continue soaring in prominence. That’s why savvy investors are now turning to this critical commodity, which may see a demand spike.

Cleaning House: Earlier this month, the U.S. House of Representatives passed a bipartisan bill eliminating provisions that reduced Social Security benefits for public sector workers. Here's a look at how broader retirement funding may be impacted.

Shady Dealings: Shares of department store giant Macy's suffered a hit when an internal investigation revealed that an employee hid millions of dollars in expenses. Take a deeper look at the technical implications for M stock.

Short Circuit: Notorious former pharmaceutical executive Martin Shkreli made waves again when he predicted Cassava Sciences' implosion a day before releasing disappointing clinical results. Read the unfiltered take of this “lotto” ticket.

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How Rate Cuts Could Ignite a Market Rally

Editor’s Note: Every week, Benzinga Edge members receive the Insider Report. It’s a rundown of what to expect from the markets in the week to come, which sectors are outperforming and why, and most importantly, a selection of hand-picked stocks that are poised to move up because of that week’s trends. Here’s a sneak peek at one piece of the latest Insider Report’s sector forecast:

After the election, we saw a lot of traders and investors chase the stock market's breakout. It was only natural that we saw a few consecutive sessions of selling afterwards. The market loves to make a fool out of the largest number of people.

But going into 2025, I think the groundwork is there for a full-blown mania to unfold. We have the Fed lowering interest rates and adding liquidity to this market, and there is the potential for major reforms at the fiscal level.

In order for this market to fully top out, we need to enter an environment where the majority is completely ecstatic about the market environment. And we are simply not there yet. The closest comparison would be late-2021/early-2022. I think there's still a distance to go.

To keep reading and to find out how investors can prepare for the coming equities boom, sign up for Benzinga Edge here.

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