Stock Market Sees Pre-Christmas Boost
As the holiday season approaches, the stock market is experiencing a welcome surge, driven by the strong performance of big tech companies. The S&P 500 closed with a gain of over 1% on Tuesday, marking a promising start to the shortened pre-holiday session.
Big Tech Leads the Charge
Tesla Inc. took the lead, with Broadcom Inc. and Advanced Micro Devices Inc. also making significant gains. This upward trend is attributed to President Joe Biden’s team launching a probe into Chinese-made chips. According to Matt Maley at Miller Tabak, “The action of the past few weeks shows that the big-cap tech names are still the key leadership group in today’s stock market.”
The “Santa Claus Rally” Effect
Investors are now pinning their hopes on the “Santa Claus Rally,” a phenomenon where stocks rise during the final five trading sessions of a year and the first two of the new one. Since 1950, the S&P 500 has generated average and median returns of 1.3% during this period, significantly outpacing the market’s average seven-day gain of 0.3%.
January Barometer: A More Accurate Indicator?
While the “Santa Claus Rally” has preceded a 10.4% average annual gain for the S&P 500 since World War II, Sam Stovall at CFRA believes that the “January Barometer” is a more accurate indicator. This market hypothesis posits that January’s performance predicts the year’s performance. Since 1945, when the year started with a gain in January, the S&P 500 rose an average of 18.3% in price during the entire year.
Market Trends and Insights
The S&P 500 has managed to stay solidly above its 200-day moving average for the entirety of 2024, a rare occurrence. Bank of America Corp. clients have been large net buyers of US equities for the seventh consecutive week, with a focus on large caps. Citigroup Inc. strategists recommend a more-balanced approach in US stocks over the first quarter, with a greater opportunity in defensive sectors.
Corporate Highlights
American Airlines Group Inc. attributed a brief groundstop on all US flights to a technical vendor glitch. Nippon Steel Corp.’s proposed acquisition of US Steel Corp. faces opposition from President Biden. Salesforce Inc. is taking multiple large customers from former partner Veeva Systems Inc. in a growing rivalry. A Starbucks Corp. barista strike has shut down about 170 cafes nationwide.
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
Market Performance
- The S&P 500 rose 1.1%
- The Nasdaq 100 rose 1.4%
- The Dow Jones Industrial Average rose 0.9%
- The MSCI World Index rose 0.9%
- Bloomberg Magnificent 7 Total Return Index rose 2.1%
- The Russell 2000 Index rose 1%
Currencies and Commodities
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0403
- The British pound was little changed at $1.2539
- The Japanese yen was little changed at 157.23 per dollar
- Bitcoin rose 3.6% to $97,221.11
- Ether rose 0.8% to $3,445.48
- West Texas Intermediate crude rose 1.2% to $70.10 a barrel
- Spot gold rose 0.2% to $2,616.87 an ounce
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