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Santa Claus comes tonight, but if stock market participants are lucky he will start sprinkling some gifts today, which marks the official start to the "Santa Claus Rally" period (last five trading days of the year and first two trading days of the new year).
As we noted yesterday, there is no guarantee that Santa Claus will show during that time, yet he has a pretty good history of spreading cheer over that seven-session stretch. According to the Stock Traders Almanac, the S&P 500, since 1950, has gained an average of 1.3% over that period.
Yesterday's 0.7% gain in the S&P 500, then, doesn't count -- at least not in Santa Claus Rally terms. It counts, though, in real terms for a stock market that has been spreading cheer all year. Entering today, the market cap-weighted S&P 500 is up 25.2% in 2024 (the equal-weighted S&P 500 is up 11.7%) and the Nasdaq Composite is up 31.7% (the Nasdaq 100 is up 27.8%).
Currently, the S&P 500 futures are up nine points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 70 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are down 13 points and are trading 0.1% below fair value.
It looks like Santa Claus's sleigh will be a little slow getting off the ground, but he would be the first to tell you that it isn't how he starts, it's how he finishes.
The slow start relates in part to a lack of news catalysts and the appeal of Christmas Eve itself with market participants turning their attention to other holiday pursuits.
The bid to do so for some may have been disrupted by an earlier situation that had American Airlines (AAL) halt its flights due to a technical issue. That issue, however, has been resolved and the FAA confirmed that the ground halt has been lifted.
Separately, we will confirm that the stock market will close early today at 1:00 p.m. ET. The Treasury market for its part will close early at 2:00 p.m. ET, but not before absorbing a $70 billion 5-yr note auction. Those results will be announced at 11:30 a.m. ET. Both markets will be closed Wednesday for Christmas Day along with a host of markets around the world.
Treasury yields continue to drift higher, flying under NORAD's Santa Claus tracking radar for the time being and still capable of creating some turbulence as Santa Claus tries to stick the landing over the next seven sessions. The 2-yr note yield is unchanged at 4.35% (but up 20 basis points for the month) and the 10-yr note yield is up two basis points to 4.62% (and up 45 basis points for the month).
Unlike Santa Claus, trading conditions today are expected to be thin. That could lead to some outsized moves in thinly-traded stocks or even perhaps in non-thinly traded stocks. It will be a waiting game to see what unfolds, just like it is for anyone preparing for Santa's arrival tonight. Please accept our best wishes that Santa sticks the landing.
