Weekly Wrap

The stock market logged some gains on this holiday-shortened week. The equity market closed at 1:00 p.m. ET on Tuesday and remained closed on Wednesday for Christmas Day. 

The "Santa Claus rally" period (i.e. the last five trading days of the year and the first two trading days of the new year) began on Tuesday and doesn't always lead to gains in the stock market, but usually features a positive skew. The S&P 500 closed 0.7% higher on the week, the Dow Jones Industrial Average settled 0.4% higher than last Friday, and the Nasdaq Composite was 0.8% higher this week.

There wasn't a lot of market-moving news and volume was thin ahead of another abbreviated week. The equal-weighted S&P 500 settled fractionally higher than last week. 

Gains in some mega caps and chipmakers provided some support to the broader equity market. NVIDIA (NVDA) closed 1.7% higher, Tesla (TSLA) gained 2.5%, and Broadcom (AVGO) surged 9.5%. 

Qualcomm (QCOM) was another winner from the semiconductor space after jurors found that the chip company didn't violate terms of its agreement covering Arm Holding's (ARM) designs. Shares settled 2.9% higher than last Friday.

Eli Lilly (LLY) was another story stock, closing 2.0% higher for the week, after the FDA approved Zepbound (tirzepatide) as the first and only prescription medicine for moderate-to-severe obstructive sleep apnea in adults with obesity.

The economic calendar was light, featuring a better-than-expected weekly jobless claims report. Weekly initial jobless claims for the week ending December 21 checked in at a lower than expected 219,000 (Briefing.com consensus 232,000) while continuing jobless claims for the week ending December 14 hit their highest (1.910 million) since November 13, 2021.

Monday: 

The major indices registered gains at the start of this holiday-shortened week. The "Santa Claus rally" period (i.e. the last five trading days of the year and the first two trading days of the new year) begins Tuesday and usually leads to positive moves in equities. Monday doesn't fall within the official Santa Claus rally, but many stocks finished higher.

The Dow Jones Industrial Average traded slightly lower than Friday's close through most of the session, but settled 0.2% higher. The S&P 500 (+0.7%) and Nasdaq Composite (+1.0%) traded above their prior closing levels through most of the session, bolstered by gains in mega cap and semiconductor-related names.

Reviewing Monday's economic data:

• November Durable Orders -1.1% (Briefing.com consensus -0.3%); Prior was revised to 0.8% from 0.2%, November Durable Goods -ex transportation -0.1% (Briefing.com consensus 0.3%); Prior was revised to 0.2% from 0.1%
  • The key takeaway from the report is that it showed a rebound in business spending in November, evidenced by a 0.7% increase in new orders for nondefense capital goods excluding aircraft -- a proxy for business spending -- following a 0.1% decline in October.
• December Consumer Confidence 104.7 (Briefing.com consensus 113.5); Prior was revised to 112.8 from 111.7
  • The key takeaway from the report is that consumers were substantially less optimistic about future business conditions and incomes than they were last month.
• November New Home Sales 664K (Briefing.com consensus 670K); Prior was revised to 627K from 610K
  • The key takeaway from the report is that new home sales, which are tabulated when contracts are signed, increased in November with the help of lower selling prices that were needed to help offset affordability constraints driven by rising mortgage rates.

Tuesday:

The major indices logged gains across the board on below-average volume at the NYSE. This session 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), which doesn't always result in gains for the market, but it did on Tuesday.

Buying activity was broad based, leading 25 of the 30 Dow components to close higher and all 11 S&P 500 sectors to finish in the green.

The consumer discretionary sector logged the biggest gain by a decent margin, jumping 2.6% thanks to Tesla (TSLA) and Amazon.com (AMZN). Apple (AAPL), Microsoft (MSFT), NVIDIA (NVDA), and Broadcom (AVGO) helped propel the information technology sector to a 1.0% gain.

American Airlines (AAL) was a story stock after temporarily grounding all flights due to a technical issue. Other airline stocks fared better than American, leading the US Global JETS ETF (JETS) to settle 0.5% higher. American Airlines is not a component in the S&P 500 industrial sector (+0.8%), but its competitors like Delta Air Lines (DAL) and United Airlines (UAL) were some of the top performing components.

There was no US economic data of note Tuesday.

Thursday:

It was a somewhat lackluster session. The major indices mostly traded around their prior closing levels. The Russell 2000 outperformed other indices, settling 0.9% higher, reflecting some speculative buying interest in a thinly-traded market after the holiday break.

Choppy action in some mega cap names contributed to the mixed moves in the three major indices. The Vanguard Mega Cap Growth ETF (MGK) traded up as much as 0.1% at its session high and as down as much as 0.7% at its low.

The price action in the S&P 500 sectors was muted and none of the sectors moved more than 0.6% in either direction.

Reviewing Thursday's economic data:

• Weekly Initial Claims 219K (Briefing.com consensus 232K); Prior 220K, Weekly Continuing Claims 1.910 mln; Prior was revised to 1.864 mln from 1.874 mln
  • The key takeaway from the report is that layoff activity is low; however, if one loses their job, it is becoming more challenging to find a new position.

Friday:

The stock market struggled under broad selling interest on the final session of this holiday-shortened week. The Dow Jones Industrial Average, down more than 500 points at its low, settled 333 points below Thursday's close. The S&P 500 registered a 1.1% decline and the Nasdaq Composite closed 1.5% lower than Thursday.

Stocks from all areas of the market participated in the retreat, which was driven by some profit-taking activity as 2025 approaches.

Outsized declines in many mega caps were influential in overall performance.

Friday's retreat coincided with a jump in the CBOE Volatility Index (16.10, +1.37, +9.3%) as investors have turned to the options market to hedge portfolios for increased volatility over the next 30 days, which some think could be accented with more concerted efforts to take capital gains.

Reviewing Friday's economic data:

• November Adv. Intl. Trade in Goods -$102.9 bln; Prior was revised to -$98.3 bln from -$99.1 bln
• November Adv. Retail Inventories 0.3%; Prior was revised to 0.2% from 0.1%
• November Adv. Wholesale Inventories -0.2%; Prior was revised to 0.1% from 0.2%