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

UBS Securities' trading arm suggests the U.S. stock sell-off may have ended, laying the groundwork for a year-end rebound. Last week, stocks plunged as investors questioned the prospect of further easing by the Federal Reserve and withdrew from crowded AI trading. The S&P 500 and Nasdaq 100 fell approximately 4% and 7% respectively from their record highs at the end of October, both hovering near their 100-day moving averages. However, UBS believes the stock market is poised for strength as benchmark indices find support at this key technical level, the sell-off by systemic funds has largely subsided, and expectations of a Fed rate cut next month appear to be back on track. "Our view is that the current de-risking phase has now ended," wrote Michael Romano, head of equity derivatives hedge fund sales at UBS, in a report released Sunday. New York Fed President Williams' comments on Friday that he believes there is still room for another rate cut in the near term reversed market sentiment, shifting traders' focus back to 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 Fed Governor Waller stated his support for a December rate cut. Romano predicts the S&P 500 will reach around 7,000 by the end of the year, believing the November market correction has adequately repositioned investors, creating conditions for further gains. He highlighted the strong performance of AI leader Nvidia (NVDA) and political rhetoric supporting chip exports—including discussions by President Trump regarding the tech giant's chip deal with China. Systematic fund flows also appear to have stabilized, with institutions, including volatility control funds, beginning to buy. The strategist anticipates the recent pullback may have ushered in a unique December—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 months for momentum strategies, but December could reverse that trend. (Golden Ten)