.png)
That’s the spirit. Stocks rose meagerly in an abridged Christmas Eve session. Last minute stock shopping, high spirits, or maybe just good will helped equities climb on a low volume day.
N O T E W O R T H Y
Bye bye buy. Santa is surely safely back at the North Pole, his sleigh and reindeers stowed away for the long northern Winter. He is probably taking a few well-deserved days off after his epic journey around the World to deliver joy, happiness, and goodwill to children and adults alike. Santa’s work may be done for the year, but the Christmas spirit lives on… for at least another week… in the markets that is. Starting today, traders begin to look for a so-called Santa Claus rally. The term refers to a stock rally that can occur between Christmas and the first two trading days of the year. I intentionally used the word “can” in the last sentence, because there are no guarantees in the markets. But a Santa Claus rally does have some statistical legs to stand on if you consider the past as a guide to the present and future. Remember, no guarantees. Looking back to the 1960’s, stocks posted December gains more than 2/3's of the time and that time period, including the last 5 sessions of the year along with the first 2 sessions of the New Year, has yielded positive results in 34 of the last 45 Holiday seasons, according to the Stock Trader's Almanac, which is said to have invented the term. The Almanac further shows that since 1969, the average return over the period has been +1.4% with positive returns in each of the seven sessions within it. Of course, past performance is no indicator of future returns, and this year, 2020, is hardly an average year, though it will certainly grace the pages of future almanacs of all sorts. So what do we have going for us as we enter the final chute of 2020. Year to date, the S&P500 is up by +14.62%, the Dow is up by +5.82%, the Russell has risen by +20.11%, and the Nasdaq has rocketed up by +42.71%. That last figure is not a typo, it was a good year for the growth-dominated Nasdaq… so far. We are in a pandemic, which appears to be getting worse with cases rising rapidly - not good. Lockdowns and restrictions are on the rise and so, apparently, are job losses - bad. We do have two approved vaccines which have begun to be distributed - good. Over the weekend, it was reported that the Astra Zeneca / Oxford jab is close to getting approval in the UK, bringing us to 3 vaccines. More results are due within the next month, including those from Johnson & Johnson - good and hopefully good. On Christmas Eve the UK came to a final agreement with the EU on details of its exit, or Brexit, from the Union. Wow, that is drama at its best, but it does mean that the UK will not come crashing out of its multi-year alliance with its biggest, and most important, trading partner. It seems foreign, and doesn’t get much attention in the American financial press, but it is important and well - good. This week, UK lawmakers are expected to vote on and ratify the agreed upon terms. WHILE YOU SLEPT, President Trump decided to sign the stimulus bill proposed by Congress. You know, the one that he promised not to sign all week leading up to Christmas. Well, maybe he got a visit from the Ghost of Christmas Yet to Come, à la Dickens’ Christmas Carol. Bah Humbug, indeed. Anyway Trump’s signing of the bill is good and it will still go back to Congress with redlines to see if they can come up with a way to up the direct payment to $2,000 from $600 and cut some wasteful spending measures. Bottom line here is what the flow of funds to small business, individuals, educational institutions, live entertainment venues, etc., is now assured - Good! The short term positives here will certainly provide some push to get over the hump of the year-end. However, we can’t ignore the headwinds that still threaten to stop a rally in its tracks. Many state and local government officials have been hinting of increased quarantines after Christmas in an attempt to beat down the recent surge in COVID hospitalizations. Exactly when “after” is referring to is unknown, but government officials may seize on this typically slow time to make a stand while minimizing the economic fallout. Slow, maybe, but we still have lots of work to get done in this shortened week and beginning of next. So, let’s get to work, shall we!
THE MARKETS
Stocks traded up modestly last Thursday in a low-volume, shortened session. Positive sentiment carried the day. The S&P500 rose by 0.35%, the Dow Jones Industrial Average climbed by +0.23%, the Russell 2000 Index slipped by -0.16%, and the Nasdaq Composite Index traded up by +0.26%. Bonds climbed and 10-year treasury yields slipped by -2 basis points to 0.92%.
NXT UP
- Dallas Fed Manufacturing Activity (Dec) is expected to come in at 10.2, down from November’s 12.0.
- Stock and Bond markets will be closed Friday for New Years.
Bond markets will close early on Thursday.
- We will get Case-Shiller Home Price Index, Chicago PMI, Pending Home Sales, and the all-important weekly employment numbers. Please refer to the attached economic calendar for details.
service@siebert.com
Siebert Financial (800)872-0444