Opinion: The correction in US stocks has bottomed out, and a rebound is expected by the end of the year.

According to Odaily Planet Daily, UBS Securities' trading department stated that the sell-off in US stocks may have come to an end, laying the foundation for a rebound by the end of the year.

Last week, stocks fell sharply as investors doubted the prospect of further easing by the Federal Reserve and withdrew from crowded AI trading. The S&P 500 and Nasdaq 100 fell about 4% and 7% respectively from their record highs at the end of October, both dropping to near their 100-day moving averages.

However, UBS believes that with the benchmark index finding support at this key technical level, the sell-off by systemic funds largely subsiding, and expectations of a Fed rate cut next month seemingly back on track, the stock market is likely to strengthen in the future.

“Our view is that the current de-risking phase has now come to an end,” Michael Romano, head of equity derivatives hedge fund sales at UBS, wrote in a report released last Sunday.

New York Fed President Williams' remarks on Friday that he believes there is still room for another rate cut in the near future reversed market sentiment, making traders again lean towards a rate cut next month. A UBS basket tracking stocks that would benefit from a Fed rate cut rose 4.6% on Friday, its biggest one-day gain since August.

On Monday, all three major U.S. stock indexes rose after Federal Reserve Governor Waller stated that he supports a December rate cut.

Romano predicts that the S&P 500 will rise to around 7,000 points by the end of the year. He believes that the market shakeout in November has fully reset positions, creating conditions for subsequent gains.

He highlighted the strong performance of AI leader Nvidia (NVDA) and political rhetoric supporting chip exports—including discussions by US President Trump regarding the tech giant's chip deal with China.

The flow of funds into systematic funds also appears to have stabilized, with institutions, including volatility control funds, beginning to shift towards buying.

The strategist predicts that the recent pullback may have ushered in a unique December for the market – momentum stocks are poised for a strong performance.

UBS's long/short momentum basket fell 14% in November. He stated that November is typically one of the worst-performing months for momentum strategies, but December may reverse this trend. (Jinshi)