November and December traditionally rank among the strongest months of the stock market year, with equity markets historically showing gains following United States mid-term elections. However, a sell-off in technology shares following this year's mid-terms has generated uncertainty regarding whether share prices will advance through the end of the year.
The mixed sentiment materialized as the Swiss Market Index closed above 15,000 points for the first time, while the Nasdaq entered a correction. The Swiss benchmark index demonstrated relative resilience with a weekly decline of 0.10 percent, though the continuation of the upward trajectory remains open at the domestic exchange. Historical data supports an optimistic view, showing that over the past 25 years, the SMI gained an average of 2.66 percent in the fourth quarter, while the SPI rose 2.5 percent, the Nasdaq added 4.5 percent, and the S&P 500 advanced 4.88 percent. Furthermore, since 1950, the S&P 500 has recorded gains in the 12 months following every mid-term election, averaging 16.6 percent.
Market participants offer various explanations for year-end strength. Stephan Sola, founder of Sola Capital, points to window dressing by fund managers, the expiration of tax-motivated selling in the United States, and traditional optimism toward the new year. Patrick Hasler, equity fund manager at Migros Bank, attributes the phenomenon primarily to psychology, noting that most market years end in positive territory, creating a reluctance among investors to miss out. Nonetheless, the pattern lacks absolute reliability. The SMI failed to stage a year-end rally in four of the past 25 years—specifically in 2002, 2008, 2018, and 2024. Sola observes that averages conceal substantial outliers and describes seasonality at best as a tailwind rather than a motor. Matthias Müller, financial analyst and fund manager at St. Galler Kantonalbank, similarly avoids aligning investment strategies with seasonal effects, viewing them as insufficiently reliable.
Additional upward momentum has already materialized, as the SMI advanced approximately 7 percent since October 6, exceeding twice its average fourth-quarter gain according to Bloomberg data. Since the start of the year, the SMI stands nearly 12 percent higher, with the SPI up almost 15 percent, setting a high bar for further appreciation.
Fundamental factors have thus taken precedence over seasonality. Sola views the Nasdaq correction less as an economic warning signal and more as a reassessment of technology valuations, noting that the market now demands earnings rather than merely investments from artificial intelligence titles. Quarterly figures from Nvidia scheduled for November 17 serve as an important gauge, followed by the United States Federal Reserve meeting in December. Monetary policy remains a critical variable, given that higher interest rates pressure growth company valuations and diminish the relative attractiveness of equities compared to bonds.
Energy prices also influence direction, with declining costs easing inflationary pressure and relieving consumers and corporations, though geopolitical risks involving Iran persist as a potential catalyst for renewed oil price increases. Despite these uncertainties, Müller considers the prerequisites for a year-end rally intact, citing robust consumer resilience and company profit developments that do not preclude higher prices. Sola similarly identifies recovery potential as trend-following participants have reduced positions, which could favor a countermovement if selling pressure subsides. Hasler assesses the economic environment as satisfactory while avoiding short-term forecasts.
Uncertainty within the technology sector may benefit the Swiss equity market, which features defensive heavyweights such as Nestlé, Novartis, and Roche rather than the dominant technology conglomerates found in United States indices. Hasler characterizes Switzerland as having mutated into an anti-tech wager against artificial intelligence, prompting him to downgrade the limited domestic technology holdings in his portfolio to a neutral weight. Müller notes that broad portfolio diversification provided protection during recent turbulence, leading him to maintain his positioning while evaluating potential purchases.
For investors, composure remains paramount. Sola advises against panic selling or flight into cash for those with a long-term plan, suggesting that increased volatility can be utilized for staggered entry points. He notes that year-end selling of loss positions for tax or accounting purposes is often independent of fundamentals and can create attractive entry opportunities in companies whose shares declined despite record orders.
