Market Recap: Stocks Rise in Shortened Christmas Eve Session
Major Indexes Close Higher as Santa Claus Rally Begins
On Tuesday, December 24, 2024, Wall Street closed higher in a shortened Christmas Eve trading session, marking the beginning of the historically strong “Santa Claus rally” period. The stock market demonstrated resilience as investors focused on the Federal Reserve’s interest rate outlook for 2025 and the performance of several “Magnificent Seven” stocks.
Current Market Performance
As of the 1:00 p.m. ET close:
– The S&P 500 (SPX) gained 0.7%, or 43.22 points, ending at 5,974.07.
– The Nasdaq Composite advanced 1% or 192.29 points to 19,764.89.
– The Dow Jones Industrial Average (DJI) rose 0.2% or 66.69 points to close at 42,906.95.
Sector Performance and Market Breadth
Four of the eleven broad sectors of the S&P 500 closed in positive territory. The Technology Select Sector SPDR (XLK) led the gains with a 0.9% increase, followed by the Health Care Select Sector SPDR (XLV) at 0.5%, and the Consumer Discretionary Sector SPDR (XLY) at 0.1%.
“Magnificent Seven” Stock Performance
Several of the “Magnificent Seven” stocks showed strong performance:
– NVIDIA Corporation (NVDA): Up 3.7%
– Tesla, Inc. (TSLA): Increased by 2.3%
– Meta Platforms, Inc. (META): Surged by 2.5%
– Alphabet Inc. (GOOGL): Gained about 1.6%
– Amazon (AMZN) and Apple (AAPL): Modest increases
– Microsoft (MSFT): Fell by 0.3%
Market Sentiment and Upcoming Events
The fear-gauge CBOE Volatility Index (VIX) decreased 8.6% to 16.78, indicating reduced market anxiety. Trading volume was lower than the last 20-session average, with 12.76 billion shares traded on Monday.
Investors are closely watching the Federal Reserve’s future policies. The CME FedWatch tool shows a 91.4% likelihood of the Fed keeping rates unchanged at its January meeting. Traders expect the Fed to maintain rates in the range of 4% to 4.25% by the end of 2025, slightly higher than previous projections.
Santa Claus Rally and Market Outlook
The market has entered the “Santa Claus rally” period, which historically sees the S&P 500 gain an average of 1.3% in the last five trading days of December and the first two of January. However, some market participants are questioning whether U.S. stocks will continue to climb to new record highs in the coming days, given concerns about market health and high valuations.
Individual Stock Movements
– U.S. Steel (X): Fell 2.3% in premarket trading as Nippon Steel’s $15-billion bid for the company was referred to President Joe Biden.
– American Airlines (AAL): Shares declined after a technical issue briefly grounded all flights on one of the busiest travel days of the year.
– Broadcom (AVGO) and Advanced Micro Devices (AMD): Continued to rise in early trading, boosted by analysts’ bullish comments about their artificial intelligence potential.
Other Market Indicators
– Treasury yields edged higher, with the 10-year yield ticking up to 4.63%.
– The U.S. dollar strengthened, following Treasury yields higher.
– Bitcoin (BTCUSD) surged to $97,000 after tumbling below $93,000 the previous day.
– Oil futures traded slightly higher, with West Texas Intermediate at about $69.75 a barrel.
– Gold futures remained relatively stable.
Looking Ahead
As 2024 comes to a close, the stock market is poised to round off its second consecutive year of gains. However, investors remain cautious about the potential impact of higher interest rates and market valuations. The shortened holiday trading week may see choppy trading due to light volumes, but the historical Santa Claus rally could provide a positive end to the year.
Markets will be closed on Wednesday for Christmas and will reopen on Thursday morning. Investors will be watching for any developments that could impact the market’s performance as we head into 2025.
