(Bloomberg) — A rally in the group that led Wall Street’s gains in 2024 lifted stocks in a relatively quiet session before Christmas.
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After a strong day for big technology companies, stocks continued to advance on Tuesday. Tesla Inc. led… Shares of giant companies rise. Shares of Broadcom Inc. rose. and Advanced Micro Devices Inc. With President Joe Biden’s team launching an investigation into Chinese-made chips. In the short pre-holiday session, the S&P 500 closed with a more than 1% advance on thin trading volume.
“Events over the past few weeks show that big tech names remain the main leadership group in the stock market today,” said Matt Maley of Miller Tabak. “These big names in technology are very heavily weighted in the portfolios of a large number of institutional investors. Any buying they make over the next week is likely to be concentrated in these names.
Stock investors are also hoping for what is known as a “Santa Claus rally,” where stocks rise during the last five trading sessions of the year and the first two sessions of the new one. This time that window started on Tuesday.
“It is possible that the Santa Claus spike is alive, with strong seasonality through the end of the year,” said London Stockton of the Ned Davis Foundation Research.
Since 1950, the S&P 500 has averaged returns of 1.3% over that period, widely outpacing the market’s average seven-day gain of 0.3%, according to Adam Turnquist of LPL Financial.
“When investors are on the ‘nice list’ and Santa delivers a ‘positive’ return for the Santa Claus Rally, the S&P 500 has an average January annual return and forward annual return of 1.4% and 10.4%, respectively,” he said. .
The Standard & Poor’s 500 rose 1.1%. The Nasdaq 100 rose 1.4%. The Dow Jones Industrial Average rose 0.9%.
There was little change in the yield on 10-year Treasury bonds at 4.59%. The Bloomberg Dollar Spot Index barely moved.
While the positive “Santa Claus Rise” has preceded a 10.4% average annual gain for the S&P 500 since World War II, CFRA’s Sam Stovall says a more accurate indicator in his view is the “January Barometer.”
This is a market hypothesis that assumes that January’s performance predicts the year’s performance. The term was coined by Yale Hirsch, founder of the Stock Traders’ Calendar, in 1972.
Since 1945, when the year began with gains in January, the S&P 500 has risen an average of 18.3% over the entire year, CFRA’s Stovall said. If the first month saw a decline in price, the average return for the entire year would have been negative 1.9%.
