The US stock market experienced a surge on Monday, December 23, 2024, with chipmakers leading the technology sector’s upward trajectory. This positive performance has ignited hopes for a year-end “Santa Claus rally.” All three major indexes closed in positive territory, with the tech-heavy Nasdaq Composite showing a near 1% gain.
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Chipmakers Fuel Tech Sector Rebound
The rally was largely fueled by a resurgence in chip stocks, recovering from losses incurred during the previous week’s Fed-induced sell-off. Nvidia, a prominent player in the semiconductor industry, saw its stock price climb by 3%. Broadcom and Advanced Micro Devices also exhibited strong performance, with gains of 5% and 4%, respectively. This surge in chipmaker stocks underscores the continued influence of artificial intelligence (AI) on market trends. As Louis Navellier, Chief Investment Officer of Navellier & Associates, noted, “It’s been an AI-driven year, and it appears that’s how it is headed into the year-end.”
Anticipating a Santa Claus Rally
Market participants are now anticipating a potential “Santa Claus rally,” a phenomenon characterized by a stock market surge during the last week of December and the first two trading days of January. Historically, a positive Santa Claus rally has often been a precursor to a strong year for the stock market. According to Sam Stovall, Chief Investment Strategist at CFRA Research, the S&P 500 has seen an average annual gain of 10.4% following a positive Santa Claus rally since World War II. Conversely, a decline during this seven-day period has historically resulted in a more modest average annual increase of 5.7% for the S&P 500, with gains occurring only 32% of the time.
Shortened Trading Week Ahead
Investors should note that trading hours will be abbreviated on Tuesday, December 24th, due to the Christmas holiday. The New York Stock Exchange will close at 1:00 PM ET.
Market Close on Monday, December 23, 2024:
- S&P 500: 3,947.07 (+0.73%)
- Dow Jones Industrial Average: 42,906.95 (+0.16%)
- Nasdaq Composite: 19,764.88 (+0.98%)
Other Notable Economic Developments:
- Consumer confidence in the US unexpectedly declined to levels nearing recession territory, as indicated by the Conference Board.
- Russia’s overheated economy is reportedly impacting trade routes with China.
- MicroStrategy has maintained its bitcoin acquisition strategy for seven consecutive weeks. Expert opinions suggest a 0% probability of a recession in the coming year, prompting a shift in focus towards other potential economic concerns.
- Goldman Sachs has identified two defensive sectors within the stock market poised for potential gains.
In conclusion, the strong performance of chip stocks and the broader market on Monday has raised expectations for a Santa Claus rally. While historical trends suggest a correlation between a positive year-end rally and subsequent market performance, investors should remain cautious and consider various economic factors. The shortened trading week leading into the holiday season may also influence market volatility.
