Closing Recap

Tuesday, December 24, 2024

Santa Claus came to town on Tuesday, giving gifts of higher stock markets! US markets were in the Christmas spirit, handed a risk-positive mood where market breadth favored advancers over decliners by 2:1 margin, stocks surged, Bitcoin spiked over 5% topping $98K and investors went into the Christmas Day holiday with two consecutive market closes at or near the highs! There was very little market moving stock news, no economic data, no research, but plenty of “green” on traders’ screens as the “Santa Claus” rally started on a firm note. The rally came despite Treasury yields jumping to more than 7-month highs with the 10-yr topping 4.62% (before paring gains) and the dollar index (DXY) extended gains since last week’s FOMC reduced rate cut forecast in 2025. All eleven S&P sectors finished higher, but the same players again doing the leading, with Tech (XLK), Consumer Discretionary (XLY) and Communications (XLC) big winners along with Financials (XLF) and a rebound in Energy (XLE).

Given the lack of stock market news due to the Christmas holiday, here are a few interesting stats:

1)     @Convertbond noted “US 30-Year Bond on Christmas Eve: 2024: 4.8%, 2023: 4.0%, 2022: 3.8%, 2021: 1.9%, 2020: 1.6%, 2019: 2.3%, 2018: 3.0%, 2017: 2.8%, 2016: 3.1%, 2015: 3.0%, 2014: 2.7% – term premium, sustained inflation. Highest yield since 2007, on Dec 24.”

2)     Since 1969, the last five trading days of the year, combined with the first two of the following year, have yielded an average S&P 500 gain of 1.3% – a period known as the “Santa Claus Rally”, according to the Stock Trader’s Almanac. @Geiger_Capital tweeted: “The next 7 trading days are officially the “Santa Rally” window…It was down last year but has only been down back-to-back years twice since 1950. S&P 500 averages +1.3%.”

3)     @bespokeinvest noted “The S&P 500 and S&P 500 Equal weight are on track to have roughly the same price gain in 2024 as they did in 2023. Equal weight in 2023: +11.56 and Equal weight in 2024: +11.47. Cap-weighted in 2023: +24.23% and Cap-weighted in 2024: +24.34%.

As noted earlier, stock market strength remains very concentrated as @Barchart tweeted last night “Top 10 stocks now account for an all-time high 39.9% of the S&P 500 SPX.” The Mag 7 names (AAPL +32.59% YTD, AMZN +48.12%, GOOGL +39.33%, META +69.47%, MSFT +15.75%, NVDA +182%, TSLA +73.29%) and you can throw in NFLX +87.2% YTD have continued to keep major averages higher the last few months, with many of them hitting all-time highs this month. Coming into today, the Communications sector (XLC) was up +35% YTD followed by Consumer Discretionary (XLY) +28% YTD and Technology (XLK) is up 23.7% YTD. The only non-tech sector also leading is Financials (XLF) +28.75% YTD. Meanwhile Healthcare (XLV) is up only +1.75% YTD, REITs (XLRE) +1.2% YTD, Energy (XLE) flat on year and Materials (XLB) -0.55% YTD) – these numbers improved after today.

• Bitcoin caught a bounce this morning, rising off the morning lows of about $93,300 to afternoon highs above $98,000, but roughly $10,000 below the all-time peak set on Dec. 17.

• In Restaurants: EAT was upgraded to Buy from Hold with $150 tgt at Argus noting the company has been successful in raising menu prices, invested in staffing which has led to improved employee retention and has simplified processes leading to improved efficiencies in the kitchen and in overall restaurant operations.
• In Crypto: Late yesterday, at a special meeting, MSTR stockholders to be asked to approve increase in authorized Class A shares from 330M shares to 10.33B shares; stockholders to be asked to approve raise in authorized shares of preferred stock from 5M to 1.01B shares. Overall Bitcoin miners and related names HUT, MARA, RIOT, WULF, CLSK, COIN rallied.
• In Pharma, ENTA said to appeal ruling related to ‘953 Patent Infringement lawsuit as court issued a summary judgment granting PFE motion the ‘953 patent is invalid; ENTA seeks damages for patent infringement in the make, use and sale of Pfizer’s COVID-19 antiviral, Paxlovid.
• In Banks (C, BAC, JPM, WFC): the Federal Reserve announced in a statement that it is looking to make changes to the bank stress tests and will be seeking public comment on what it calls “significant changes to improve the transparency of its bank stress tests and to reduce the volatility of resulting capital buffer requirements.” CNBC reported this morning that the biggest banks are planning to sue the Federal Reserve over the annual bank stress tests.
• In Housing: RDFN said U.S. home prices grew 0.5% from a month earlier in November on a seasonally adjusted basis, the third consecutive month with a 0.5% increase. On a year-over-year basis, home prices rose 5.7%, the lowest annual increase since October 2023. November was the sixth-consecutive month where annual price growth slowed and the second-consecutive month where it dipped below 6%