Closing Stock Market SummaryIt was a decidedly good day for the stock market as some of the most beaten-up names led the main indices to sizable gains in a pent-up rebound trade. The broader market drew support from mega cap stocks, which have suffered sizable losses recently on valuation concerns and presumably tax-loss selling activity by participants who bought into the seemingly invincible stocks last year.
Entering today's session, Tesla (TSLA 121.82, +9.11, +8.1%) was down 42% for the month, Apple (AAPL 129.61, +3.57, +2.8%) was down nearly 15%, and the Vanguard Mega Cap Growth ETF (MGK) (+2.5%) was down 11.3% in December. Many stocks saw similar price action, which led to the broad-based rally effort today. Advancers led decliners by a greater than 5-to-1 margin at the NYSE and a greater than 4-to-1 margin at the Nasdaq.
All 11 S&P 500 sectors logged gains today with mega cap leadership pushing the communication services (+2.7%), information technology (+2.6%), and consumer discretionary (+2.6%) sectors to the top of the leaderboard. On the flip side, the countercyclical consumer staples (+0.4%) and utilities (+0.8%) sectors fell to the bottom of the pack.
The semiconductor space was another source of support for the broader market. The PHLX Semiconductor Index was up 3.3%. Taiwan Semiconductor Manufacturing Co. (TSM 76.00, +2.94, +4.0%) was a winning standout for the group after holding a 3nm volume production and capacity expansion ceremony, marking a key milestone for advanced manufacturing.
Notwithstanding today's positive price action, the S&P 500 closed below the 3,850 level, where it has been stuck since mid-December. It was still a good change of pace, though, for what was deemed a disappointing Santa Claus rally period entering today.
The Santa Claus rally period encompasses the last five trading days of the year and the first two trading sessions of the new year, and it is believed to be a good sign for how the new year will start when it produces a cumulative gain over that stretch. To be clear, 2022 was a definite exception to that belief. Recall that the 2021 Santa Claus rally produced a net gain of 1.4% for the S&P 500 and yet the S&P 500 declined 5.3% this January and 5.0% in the first quarter.
When this year's Santa Claus rally period began, the S&P 500 stood at 3,822.39. Today the S&P 500 closed at 3,849.28, which is to say Santa Claus has come in from the cold.
The Treasury market settled in mixed fashion. The 2-yr note yield rose two basis points to 4.37% and the 10-yr note yield fell six basis points to 3.83%.
- Dow Jones Industrial Average: -8.6% YTD
- S&P Midcap 400: -14.1% YTD
- S&P 500: -19.2% YTD
- Russell 2000: -21.3% YTD
- Nasdaq Composite: -33.0% YTD
Reviewing today's economic data:
- Initial jobless claims for the week ending December 24 increased by 9,000 to 225,000 ( consensus 220,000) while continuing jobless claims for the week ending December 17 increased by 41,000 to 1,710,000.
- The key takeaway from the report is that the level of continuing jobless claims is the highest since February and up noticeably since September when it was just shy of 1.350 million, suggesting that a very tight labor market is showing some signs of loosening up based on the extended time it is taking for dislocated employees to find a new position.
- Weekly EIA Natural Gas Inventories showed a draw of 213 bcf versus a draw of 87 bcf last week
- Weekly EIA Crude Oil Inventories showed a build of 0.718 million barrels after last week's draw of 5.89 million barrels
Friday's economic data is limited to the December Chicago PMI (consensus 40.0; Prior 37.2) at 9:45 a.m. ET.