(Bloomberg) — A rally in the group that has led Wall Street’s gains in 2024 propped up stocks in a quiet session ahead of the Christmas holiday.
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Following a strong day for big tech, the shares continued to power ahead on Tuesday. Tesla Inc. led gains in megacaps. Nvidia Corp. and Broadcom Inc. climbed as President Joe Biden’s team launched a probe into Chinese-made chips. The S&P 500’s volume was 40% below the average of the past month, with trading in equities due to end at 1 p.m. New York time. The recommended close for the cash Treasury market is 2 p.m.
“The action of the past few weeks shows that the big-cap tech names are still the key leadership group in today’s stock market,” said Matt Maley at Miller Tabak. “These big tech names are extremely highly overweighted in the portfolios of a huge number of institutional investors. So, any buying they do over the next week is likely to be concentrated in these names.”
Equity investors are also hoping for what’s known as the “Santa Claus Rally,” in which stocks rise during the final five trading sessions of a year and the first two of the new one. This time around that window started Tuesday.
“Santa Claus rally could still be alive, with strong seasonality into the end of the year,” said London Stockton at Ned Davis Research. “The S&P 500 looks short-term oversold and excessive optimism has been relieved.”
The S&P 500 rose 0.7%. The Nasdaq 100 added 0.8%. The Dow Jones Industrial Average gained 0.4%.
The yield on 10-year Treasuries advanced three basis points to 4.62%. The Bloomberg Dollar Spot Index was little changed.
With the market up over 25% this year and no corrections of more than 10%, the S&P 500 has managed to stay solidly above its 200-day moving average for the entirety of 2024, noted Bespoke Investment Group strategists.
“Barring a significant market selloff in the last few trading days of the year, this will be the 12th year since 1952 (when we went to the current 5-day trading week at the NYSE) that the S&P has traded above its 200-DMA all year,” they said.
The average next-year change following these years has been a gain of just 4.6% compared to the average gain of 9.2% for all years, Bespoke noted.
Bank of America Corp. clients bought US equities for the seventh consecutive week, according to strategist Jill Carey Hall.
Similar to the prior five weeks, clients bought both single stocks and exchange-traded funds, with bigger inflows into the former, she noted. Flows were primarily in large caps.
Investors should have a more-balanced approach in US stocks over the first quarter, according to Citigroup Inc. strategists led by Scott Chronert, who see a greater opportunity in defensive sectors.
They raised health care to overweight, noting valuations are now lower and fundamentals seem close to inflection point. Meantime, they are selective on growth stocks, looking for stronger fundamental trend versus valuation and potential margin improvement.
Citi’s strategists are overweight in media, internet and semiconductors, while raising software to market weight.
Corporate Highlights:
A brief groundstop on all American Airlines Group Inc. flights in the US was canceled, the Federal Aviation Administration said in an advisory statement.
A US national security panel has deadlocked on its review of the sale of United States Steel Corp. to Nippon Steel Corp., a procedural development that opens the door for President Joe Biden to block the transaction.
Salesforce Inc. says it’s taking multiple large customers from former partner Veeva Systems Inc. in a mounting rivalry to sell software to the pharmaceutical industry.
A Starbucks Corp. barista strike will spread to more than 300 cafes, according to its worker union, disrupting service at locations nationwide during the final days of the crucial holiday shopping season.
Arcadium Lithium Plc, a chemicals company, said it obtained all shareholder approvals for a proposed acquisition by Rio Tinto Plc.
The proposed business integration of Honda Motor Co. and Nissan Motor Co. is positive overall for the credit quality of the two Japanese automakers, but it carries risks especially for Honda, according to Moody’s Ratings.
Key events this week:
Christmas Day, Wednesday
US initial jobless claims, Thursday
Boxing Day, Thursday
Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
US goods trade, Friday
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.7% as of 10:40 a.m. New York time
The Nasdaq 100 rose 0.8%
The Dow Jones Industrial Average rose 0.4%
The Stoxx Europe 600 rose 0.2%
The MSCI World Index rose 0.5%
Bloomberg Magnificent 7 Total Return Index rose 1.4%
The Russell 2000 Index rose 0.5%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0392
The British pound was little changed at $1.2543
The Japanese yen was little changed at 157.30 per dollar
Cryptocurrencies
Bitcoin rose 4.4% to $98,009.73
Ether rose 2.2% to $3,493.31
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.62%
Germany’s 10-year yield advanced four basis points to 2.32%
Britain’s 10-year yield advanced three basis points to 4.58%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Robert Brand, Sagarika Jaisinghani, Chiranjivi Chakraborty, Winnie Hsu and Rob Verdonck.
