Tech Giants Lead Stock Rebound Amid Holiday-Shortened Week
A surge in the world’s largest technology companies propelled a stock market rebound, offsetting a brief decline sparked by weaker-than-expected US consumer confidence data. The S&P 500 finished near session highs, driven by gains in Nvidia Corp., Meta Platforms Inc., and Tesla Inc.
Megacaps Drive Market Uptrend
Despite recent profit-taking, primary uptrends remain intact for equities, according to Craig Johnson at Piper Sandler. With short-term oversold conditions in place, a “Santa Claus Rally” is a strong possibility this year. Morgan Stanley’s Michael Wilson notes that negative breadth may not be as significant for high-quality stock indexes with robust price momentum.
Economic Outlook Remains Challenging
Consumer confidence unexpectedly fell for the first time in three months, driven by concerns about the economic outlook. Neil Dutta at Renaissance Macro Research warns that the economic outlook is deteriorating, and the risk of the Fed flip-flopping is high.
Market Highlights
- Qualcomm Inc. prevailed in a trial against Arm Holdings Plc’s claim that it breached a license for chip technology.
- Rumble Inc. soared to a record high after Tether agreed to buy a stake in the video-sharing platform.
- The Nordstrom family is partnering with a Mexican retailer to take its namesake department store private.
- Treasury 10-year yields advanced six basis points to 4.59%.
- The Bloomberg Dollar Spot Index rose 0.3%.
Annual Returns on Track for Stellar Performance
The S&P 500 is poised to record a stellar annual return, with the top seven biggest technology stocks accounting for more than half of the advance. The index has risen about 25% since the end of 2023.
Santa Claus Rally: A Barometer of Investor Optimism
Whether the S&P 500 can stage a “Santa Claus Rally” remains to be seen. A positive “Santa Claus Rally” has preceded a 10.4% average annual gain for the S&P 500 since World War II, with a 74% frequency of advance.
Corporate Deals and Acquisitions
- MetLife Inc. agreed to buy PineBridge Investments’ assets outside of China.
- Xerox agreed to buy printer maker Lexmark International Inc. in a deal valued at $1.5 billion.
- Hyatt Hotels Corp. is in exclusive talks with Playa Hotels & Resorts NV over strategic options.
- Aviva Plc agreed to buy Direct Line Insurance Group Plc for roughly £3.7 billion.
- Prosus NV is acquiring online travel agency Despegar.com Corp. for $1.7 billion.
Key Events This Week
- Christmas Day, Wednesday
- US initial jobless claims, Thursday
- Boxing Day, Thursday
- Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
- US goods trade, Friday
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