Market Recap: Santa Claus Rally Kicks Off on Christmas Day 2024
Major Indexes Close Higher as Holiday-Shortened Week Begins
On Wednesday, December 25, 2024, major U.S. stock indexes closed higher, marking a positive start to the traditional Santa Claus rally period. Despite the holiday-shortened trading session, investors showed optimism, pushing the markets up across the board.
The S&P 500 (^GSPC) rose 1.10% to 6,040.04, the Dow Jones Industrial Average (^DJI) gained 0.91% to 43,297.03, and the Nasdaq Composite (^IXIC) surged 1.35% to 20,031.13. This upward movement erased the S&P 500’s December decline, turning it into a modest 0.2% gain for the month.
Santa Claus Rally in Full Swing
The “Santa Claus rally,” a phenomenon first described by Yale Hirsch in 1972, refers to the stock market’s tendency to rise over the last five trading days of the year and the first two of the new year. Historically, this period has seen an average gain of 1.3% for the S&P 500 since 1969, significantly outperforming the typical seven-day trading period.
Jeff deGraaf, chairman of Renaissance Macro Research, noted, “The S&P has put up reasonable numbers over the last two sessions, as it attempts to resolve the oversold condition, but the rally has lacked momentum.” He added that while December typically has a 74% probability of positive returns, 2024 might be shaping up as an outlier unless the market receives “some serious help.”
Tech Stocks Lead the Charge
Technology stocks were among the day’s biggest winners, contributing significantly to the overall market gains. Notable performers included:
– Meta Platforms (META): Up over 2%
– Broadcom (AVGO): Surged more than 5%
– Nvidia (NVDA): Rose 3.7%
The strong performance of these tech giants helped propel the Nasdaq to its impressive 1.35% gain for the day.
Other Market Movers
Several other stocks made significant moves on Christmas Day:
– Tesla (TSLA): Jumped 7.36% to $462.28
– Honda (HMC): Soared over 12% following news of merger talks with Nissan
– Xerox (XRX): Climbed more than 12% after announcing plans to acquire printer maker Lexmark in a $1.5 billion deal
Cryptocurrency Market Update
The cryptocurrency market also saw positive movement, with Bitcoin (BTC-USD) rising 3.97% to $97,980.22 and Ethereum (ETH-USD) gaining 1.72% to reach $3,467.87.
Economic Data and Upcoming Events
While no major economic reports were released on Christmas Day, investors are looking ahead to several key events in the coming days:
– December 26: Jobless claims data and EIA Petroleum Status Report
– December 27: International Trade in Goods (Advance), Retail Inventories (Advance), and Wholesale Inventories (Advance)
– December 30: Chicago PMI and Pending Home Sales
Market Outlook and Analyst Perspectives
As 2024 draws to a close, analysts are cautiously optimistic about the market’s performance. The S&P 500 is on track for a stellar year, with gains of around 26% year-to-date. However, December’s performance has been lackluster compared to its historical average.
Jay Hatfield of Infrastructure Capital Advisors maintains a year-end 2024 S&P 500 target of 6,000, implying only a 0.4% increase from the current levels. “We might get a Santa Claus rally, but those aren’t that powerful [of] rallies,” Hatfield commented. “We’re neutral on the market.”
Looking Ahead: Potential Opportunities
Despite the overall market strength, some analysts are highlighting potential opportunities in undervalued stocks. A recent report identified several companies trading significantly below their estimated fair values, including:
– HangzhouS MedTech (SHSE:688581): 49.9% discount
– Lindab International (OM:LIAB): 49.8% discount
– NCSOFT (KOSE:A036570): 49.9% discount
Investors are advised to conduct thorough research and consider their risk tolerance before making investment decisions based on these estimates.
As the year comes to a close, market participants will be closely watching whether the Santa Claus rally can maintain its momentum and provide a strong finish to what has already been a remarkable year for U.S. equities.
