December 26, 2024

In the two days since the last newsletter on Monday, the market has done very well, with the half-day before Christmas on Tuesday being a real upside moonshot with the Dow exploding upward for a 390 point advance to 43,297 with 28 of its 30 members higher. It was now the fourth better day in a row.

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The S&P did really better with a large gain of 66 to 6040 for its third straight advance while the Nasdaq also went higher for the third straight day as well with a 266 point upside advance to 20,021 as in both cases the large technology leaders have continued to explode upward again, with AAPL making another new all-time high. In addition, other large tech companies such as AMZN and AVGO continue close to their best level as well. And for a nice change, breadth numbers led decliners by a very unusual 3 to 1 ratio and when was the last time we saw this ratio? And how about TSLA which rose over 7% for a new recent high as well and was the best S&P performer.

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The Russell 2000 Index finally got dragged to the upside with a 22 point gain to 2260 while the VIX is collapsing down to 14.23 just as it got to an unsustainable level a while ago to almost 28 for the second largest one-day advance which obviously was not sustainable as well. Now the question becomes is how much further is this advance going to continue as the old 13 support level should come into play again if the indices continue to gain and the VIX drops.

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AAL eliminated an early decline and ended with a fractional gain after the airline briefly grounded flights nationwide due to a technical issue.

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Elsewhere in the market, X gained a day after an influential government panel failed to reach consensus on the possible national security risks of the nearly $15 billion proposed sale to Nippon Steel of Japan.

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NEUE jumped by 75% after the health care company agreed to be taken private in a deal valued at roughly $1.3 billion.

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Treasury yields held steady in the bond market. The yield on the 10-year Treasury was little changed at 4.59%.

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Tuesday’s U.S. market rally comes as the stock market enters what has historically been a very joyful season. The last five trading days of each year, plus the first two in the new year, have brought an average gain of 1.3% since 1950. The so-called “Santa rally” also correlates closely with positive returns in January and the upcoming year.

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Despite the strong start to the Santa rally on Tuesday, for the month of December, before today’s start the Dow is lower by 3.6% which is its worst month since April, the S&P is nominally higher by 0.01% while the Nasdaq has done the best so far with a 4.2% advance with four trading sessions remaining for the month. But for the entire year, they are all nicely higher.

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So far this month, the U.S. stock market has lost some of its gains since the new President’s election day win, which raised hopes for faster economic growth and more lax regulations that would boost corporate profits. Worries have risen that his preference for tariffs and other policies could lead to higher inflation, a bigger U.S. government debt and difficulties for global trade.

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Even so, the stock market remains on pace to deliver strong returns for 2024. The benchmark S&P is up 26.6% so far this year and remains within roughly 1% of the all-time high it set earlier this month, of which there have been 57 new highs so far in 2024.

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Earnings are getting light and will start coming in more for the fourth-quarter in January, so this holiday-shortened week we have: today – PD slightly lower.

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Economic reports will show: today – weekly jobless claims slipped to 219,000 which is 1,000 less than last week.