Prime Highlights:
Stock Market Rally on Christmas Eve: S&P 500 increased by 1.1% and Dow Jones added 390 points, or 0.91%, and the Nasdaq 1.35% as strong stocks in the tech sector dominated its performance.
Tesla leads the rally: Shares for the electric car company rallied 7.4% and contributed majorly to the performance of Nasdaq while Amazon and Meta Platforms added over 1%.
Santa Claus Rally Starts: The period marks the beginning of the “Santa Claus rally,” a historically strong market trend observed toward the end of the year. Since 1950, the S&P 500 has averaged a return of 1.3% during this time frame.
Key Background:
On Christmas Eve, U.S. stock markets experienced a rally, with the S&P 500, Dow Jones Industrial Average, and Nasdaq all posting gains. The S&P 500 increased by 1.1%, reaching 6,040.04, while the Dow Jones gained 390.08 points, or 0.91%, closing at 43,297.03. Nasdaq Composite led the charge, rising 1.35% to 20,031.13. This was supported by a 7.4% gain in Tesla shares. Amazon and Meta Platforms also led the market higher, pushing both stocks up more than 1%.
The market rally marked the beginning of the annual “Santa Claus rally,” a phenomenon that typically occurs during the final five trading days of the year and the first two days of January. Historically, this period has yielded an average return of 1.3% for the S&P 500 since 1950, significantly outperforming the market’s typical seven-day return of 0.3%, LPL Research said.
The S&P 500 has gained 1.8% over the past two days, and the Dow is up 1% for the week. The Nasdaq has gone up 2.3% week-to-date on the back of some of the strongest performances in the tech space. As of Tuesday, the S&P 500 had risen a modest 0.1% for the month, while the Nasdaq jumped 4.2%, with notable gains from Alphabet, which rose 16%. Apple went up nearly 9%, and Tesla by 34%. The Dow lagged, down by 3.6% in December, on track for its worst monthly performance since April. A technical problem briefly grounded all of its U.S. flights, and the stock of American Airlines seesawed following a day in which its stock ended up 0.6%.
Analysts were quite positive about the toy sales this holiday season as well. According to the analysts from Jefferies, there was a reduction in inventory levels and higher store traffic in the toy sections, which means that the holiday season witnessed strong sales. Even as the stocks of Mattel and Hasbro have seen weak performance this year, analysts are optimistic on the sales front after seeing the trends lately. Overall, it has been one of those holiday trading periods where good performances in stocks have primarily been in technology, but investors remain watchful and optimistic as the final week of the year kicks in.