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By Jeffrey
Cane | Wednesday, December 22 Ho, Ho, Ho. A "Santa
Claus rally" may be in the offing. This
happens over the last five trading days in December and the first two trading
days of January, when the market typically advances. Over the last decade, Santa almost always
made his rounds. The S&P 500 rallied
every year in that new year's stretch, except in 2014-15 and in
2015-16, according to the busy elves at Dow Jones Market Data. The
benchmark index rose 1% during this seven-day period a year ago. "Why the stock market usually rises
during that period, no one seems to know with reliability," Barron's wrote in
2018, noting: Perhaps some buy ahead of
the old “January effect,” before stock prices rise in that month. Others say
it’s a time when professional money managers sell for tax purposes and less
savvy individual investors buy. If this week's trading is anything to go by,
the
Clausometer is running just high enough on spirit for such a rally
to kick off on Monday. Stocks advanced again today, closing
near their highs for a session. The S&P 500 has now gained 2.8% over the
past two days, putting Monday's setback well behind it. And the recovery has
been broad: All 11 sectors in the S&P 500 ended in the green
today. The Cboe
Volatility Index, or Vix, also fell for a
second day, a sign that markets may have steadied. Monday's slump was fueled in large part
by fears that the rapid spread of the Omicron variant could derail the
economic recovery. Covid remains a concern to be sure,
but President Joe Biden's pledge of
no more lockdowns, new studies indicating that Omicron may be less severe
than previous variants, and the authorization of Pfizer's Covid
antiviral all helped lift the mood today. Economic data also buoyed spirits. The
Conference Board's consumer
confidence index came in
at 115.8 in December, higher than expected, with declines
in concerns about both inflation and Covid. (The survey was as of Dec.
16.) In addition, existing-home
sales increased
in November for the third consecutive monthly gain. It was the second-to-last trading session
before the Christmas holiday, so trading was relatively light. Total
composite volume today was the 13th lowest of the year. Treasury prices rose with stocks, sending yields lower. The
yield on the two-year note settled at 0.665%, while the yield on the 10-year
ended at 1.457%. Crude oil climbed
2.3%, to $72.76 a barrel. Gold also rose, to $1801.60 an ounce. And it's still far off its November highs,
but Bitcoin has a modest rally going, up 5% so far this
week. It traded this afternoon around $49,082. What will happen to stocks, if Santa
does not appear this year? Yale
Hirsch, the creator of the Stock
Trader's Almanac, which has long noted
the seasonal phenomenon of the rally, has said: "If Santa should
fail to call, bears may come to Broad and Wall." The New
York Stock Exchange, of course, sits at the intersection
of Broad Street and Wall Street in lower Manhattan. Happy holidays. |
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DJIA: +0.74% to
35,753.89 The Hot Stock: Tesla +7.5% Best Sector: Consumer
Discretionary +1.8% |
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