The post-Christmas trading session saw mixed results for US stocks, as the “Santa Claus” rally struggled to maintain momentum. While the Dow Jones Industrial Average managed to eke out a slight gain, the S&P 500 and the tech-heavy Nasdaq Composite both dipped below the flatline.
The Dow closed up approximately 28 points, a modest 0.1% increase. However, the broader S&P 500 and the Nasdaq saw marginal declines, indicating a pause in the upward trend that began earlier in the week. Small-cap stocks, represented by the Russell 2000, defied the broader market trend, rising by a more substantial 0.9%. This divergence suggests that investors may be shifting their focus to smaller companies with potential for growth.
The “Santa Claus” rally, a period of historically strong stock market performance during the last five trading days of December and the first two of January, had kicked off with significant gains on Christmas Eve. Both the S&P 500 and the Nasdaq had come within striking distance of their record highs, recovering from losses experienced the previous week. However, the momentum appears to have stalled in the day after Christmas.
One factor contributing to the muted market activity was the release of weekly jobless claims data. This report, usually a routine event, took on greater significance as one of the few economic indicators released during the holiday-shortened week. The data revealed a mixed picture: initial jobless claims fell to 219,000, below the expected 223,000, suggesting continued strength in the labor market. However, continuing claims, which track the number of individuals receiving unemployment benefits, rose to 1.91 million, their highest level since November 2021. This increase in continuing claims may indicate a potential cooling in the labor market, raising concerns among investors.
Beyond the broader market trends, individual stocks also experienced notable movements. Bitcoin, after reaching all-time highs above $108,000, fell below the $96,000 level. This decline impacted crypto-linked stocks like MicroStrategy, which also saw losses. Tesla, a major market influencer, extended its declines by 2%, impacting the performance of both the Nasdaq and the S&P 500. Despite this recent dip, Tesla shares remain significantly higher year-to-date, largely due to the surge following Donald Trump’s presidential victory and Elon Musk’s instrumental role in supporting his campaign. GameStop, a popular meme stock, experienced a surge of up to 10% following a cryptic tweet from influential trader “Roaring Kitty.” Apple, meanwhile, touched intraday highs after a price target increase from Wedbush analysts, reflecting optimism about the company’s future growth prospects.
In conclusion, the US stock market presented a mixed picture in the post-Christmas trading session, with the “Santa Claus” rally losing some of its initial momentum. While the Dow managed a small gain, the S&P 500 and Nasdaq experienced slight declines. The mixed jobless claims data and individual stock movements contributed to the overall uncertainty in the market. The coming days will be crucial in determining whether the “Santa Claus” rally can regain its strength or if the market will enter the new year on a more cautious note.
