Enjoy the Santa Claus Rally while it lasts—U.S. equity markets could be in for a pullback early next year, analysts told CNBC's "Squawk Box" on Friday.
Despite an improving economy, investors may not see a huge runup next year, said Kristina Hooper, U.S. investment strategist at Allianz Global Investors. Though Allianz expects returns in the mid-to-high single digits in 2015, the year could start with the market giving up some of December's gains.
"We've borrowed something from 2015. We wouldn't be surprised to see a give back in January," she said.
Investors are still scarred from the financial crisis, so many are not in the market, and those who are lack commitment to stocks, she added.
The market's winning streak could continue into the early part of January, and is unlikely to fall off a cliff immediately, said Chris Retzler, manager for Needham's Small Cap Growth Fund.
Small cap stocks have underperformed the S&P 500, and Retzler anticipates a reversion to the mean in 2015. He said small caps are set up for a strong dollar environment and there are tailwinds in technology.
The high-yield debt market is not yet giving investors the cue that it is time to buy small cap energy stocks, he said. Investors should wait for price stability and recent capital expenditure budget cuts to play out.