A ‘Santa rally’ could push US stocks to new heights this winter, as buybacks and low bond yields help power the market

A ‘Santa rally’ could push US stocks to new heights this winter, as buybacks and low bond yields help power the market

Inflation is at its strongest in 31 years, US stocks are at record highs, and coronavirus cases are soaring in Europe. But that hasn't stopped investors getting excited about a possible "Santa rally" that many expect to push stocks to new heights this winter. The end of the year has historically been a gift to US stock market investors. The has risen on average 1.1% in November and 2.3% in December since 1936, according to Bank of America, as traders try to get ahead of what was traditionally a January rally. Yet investors are optimistic about stocks for other reasons, according to market watchers. These include the huge amounts of company buybacks coming through the pipes, strong economic growth, and the fact that bonds are so unattractive. Stock buybacks for the S&P 500 reached a record high of more than $225 billion in the third quarter, according to data from S&P Dow Jones Indices, and are likely to top $200 billion in the last quarter of 2021. "Buybacks are important because [companies have] historically been the number-one buyer of US equities," Ben Laidler, global markets strategist at eToro, told Insider. "And that buyer basically disappeared last year because companies pulled