Stock Market Update

[BRIEFING.COM] The stock market was in rally-mode, benefitting from buy-the-dip interest after recent declines. The S&P 500 closed 1.3% higher than Thursday, but was 0.5% lower since the start of the Santa Claus rally period (last five trading sessions of the year and first two of the new year). The index settled just below its 50-day moving average (5,944).

Gains were broad based. Market breadth favored decliners by a roughly 3-to-1 margin at the NYSE and at the Nasdaq. 24 of the 30 Dow components registered gains and all 11 S&P 500 sectors closed higher. The consumer discretionary sector led the pack by a wide margin, jumping 2.4% thanks to a gain in Amazon.com (AMZN 224.19, +3.97, +1.8%) and a big move in Tesla (TSLA 410.44, +31.16, +8.2%). Shares of TSLA rebounded following its 20% drop from their December highs as of yesterday's close.

Other mega cap names outperformed the broader equity market, boosting index performance. The Vanguard Mega Cap Growth ETF (MGK) closed 1.7% higher.

Apple (AAPL 243.36, -0.49, -0.2%) was an exception, extending declines related to iPhone discounts and sliding demand in China. 

Shares of US Steel (X 30.76, -1.84, -5.6%) also went against the upside grain, sliding after the White House confirmed that President Biden will block the Nippon Steel takeover. Nippon Steel Corporation and US Steel released a statement condemning the U.S. Government’s decision to block proposed acquisition of US Steel, calling it unlawful.

The 10-yr yield settled two basis points higher at 4.60% and the 2-yr yield settled three basis points higher at 4.28%.

• Russell 2000: +1.7% YTD
• Nasdaq Composite: +1.6% YTD
• S&P 500: +1.0% YTD
• S&P Midcap 400: +1.0% YTD
• Dow Jones Industrial Average: +0.4% YTD

Reviewing today's economic data:

• The December ISM Manufacturing Index checked in at 49.3% (Briefing.com consensus 48.5%) versus 48.4% in November. The dividing line between expansion and contraction is 50.0%, so the December reading suggests manufacturing sector activity contracted versus the prior month but at a slower pace. This was the ninth straight month (and 25th out of 26) that economic activity in the manufacturing sector contracted.
  • The key takeaway from the report is that manufacturing sector activity overall continued in a state of contraction, although the pace of contraction slowed at the same time the prices index picked up.
• EIA Natural Gas Inventories -116 bcf (prior -93 bcf)

Looking ahead, market participants receive the following economic data on Monday: December S&P Global US Services PMI - Final at 9:45 ET and November Factory Orders at 10:00 ET.