Market Recap: Santa Claus Rally Continues on Christmas Day 2024
As the markets closed on Wednesday, December 25, 2024, investors were treated to a continuation of the “Santa Claus Rally,” with major indexes posting gains in a holiday-shortened trading session. This upbeat performance comes as traders digest recent Federal Reserve commentary and look ahead to key economic events in the coming days.
Major Market Indexes Performance
The S&P 500 (^GSPC) finished the session up 1.1%, closing at 5,974.07. This puts the benchmark index within striking distance of the 6,000 mark, a level that seemed improbable just a few weeks ago. The tech-heavy Nasdaq Composite (^IXIC) outperformed, rising 1.4% to 20,031.13, while the Dow Jones Industrial Average (^DJI) climbed 0.9% to 43,297.03.
Sector Performance and Notable Movers
Technology stocks led the charge, with the Technology Select Sector SPDR (XLK) gaining 0.9%. Nvidia Corporation (NVDA) continued its impressive run, rising 3.7% as investors remain bullish on its artificial intelligence prospects. Tesla, Inc. (TSLA) was another standout performer, surging 7.4% to close at $462.28.
Other notable gainers included Meta Platforms, Inc. (META), which rose 2.5%, and Alphabet Inc. (GOOGL), which added 1.6%. Amazon (AMZN) and Apple (AAPL) also posted modest gains, while Microsoft (MSFT) was one of the few tech giants to see a slight decline, falling 0.3%.
Upcoming Market Events
Investors are keeping a close eye on several key economic reports scheduled for release in the coming days:
1. Initial Jobless Claims (December 26): Economists expect 225,000 new claims, slightly higher than the previous week’s 220,000.
2. Advanced U.S. Trade Balance in Goods (December 27): The previous deficit stood at $98.3 billion.
3. Chicago Business Barometer (PMI) (December 30): This will provide insights into the manufacturing sector’s health in the Midwest region.
4. Pending Home Sales (December 30): After a 2.0% increase in the previous month, this report will offer a glimpse into the housing market’s current state.
Federal Reserve Outlook and Market Sentiment
Despite the recent rally, market participants remain cautious about the Federal Reserve’s future policies. The CME FedWatch tool indicates a 91.4% probability that the Fed will keep rates unchanged at its January meeting. This has created some uncertainty regarding the economic outlook for 2025.
Investors are closely monitoring the potential for interest rate cuts in the coming year. While the Fed has signaled a more dovish stance, the timing and magnitude of any rate reductions remain subjects of intense speculation.
Cryptocurrency and Commodities
The cryptocurrency market also saw significant movement, with Bitcoin (BTC-USD) surging to $97,980.22, up 3.97% in the past 24 hours. This rally comes after a brief dip below $93,000 earlier in the week.
In the commodities market, oil prices showed modest gains. West Texas Intermediate crude futures traded at approximately $70.17 per barrel, up 0.10%. Gold futures, meanwhile, saw a slight decline of 0.08%, trading at $2,633.50 per ounce.
Looking Ahead
As we approach the end of 2024, the market’s focus will likely shift to the potential for a sustained “Santa Claus Rally” and the economic outlook for 2025. Key factors to watch include:
1. The Federal Reserve’s interest rate decisions and economic projections
2. Corporate earnings reports for Q4 2024 and guidance for Q1 2025
3. Geopolitical developments and their impact on global trade
4. The ongoing evolution of artificial intelligence and its influence on various sectors
With the S&P 500 up 26.6% year-to-date and hovering near all-time highs, investors will be watching closely to see if this momentum can carry into the new year or if a correction is on the horizon.
As always, investors are advised to maintain a diversified portfolio and consider their long-term financial goals when making investment decisions. The current market optimism, while encouraging, should be tempered with a realistic assessment of potential risks and challenges in the coming year.
