Wall Street and Broad Street signs are seen as The New York Stock Exchange (NYSE) and a Christmas tree are illuminated in New York City, United States on December 1, 2021.
Tayfun Coskun | Anadolu | Getty Images
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What you need to know today
The bottom line
In a sign of strength, major indexes rebounded off their worst day in months on Wednesday to rise again yesterday. The Dow Jones Industrial Average gained 0.87%, the Nasdaq Composite climbed 1.26% and the S&P 500 added 1.03%.
The S&P’s now tantalizingly near its record close again — just around 1% away, to be specific.
Even though the S&P sank the most in three months on Wednesday, it’s still on track to see a winning week. That’d give the index its eighth positive week in a row, the longest winning streak it’s enjoyed since 2017.
Yesterday’s rally was broad-based, with more than 450 names rising in the S&P, but chip stocks were a standout. Shares of Micron Technology, in particular, popped 8.6% to put it at the top of the charts after the chipmaker reported positive earnings. Its rising tide helped lift the sector as a whole: Marvell Technology jumped 4.71%, Arm added 4.09% and Advanced Micro Devices rose 3.28%, to name a few.
Optimism from individual investors might have helped the resilience of U.S. stocks. Bullishness about the outlook for stocks across the next six month is at the highest since April 2021, according to the latest survey by American Association of Individual Investors.
But UBS managing partner Michael Riesner thinks the rally in stocks is “the setup for a classic bull trap.” Stocks may not rise sustainably into the new year, Riesner thinks, because of low volatility and yields hitting oversold levels.
Still, let’s not dampen the holiday cheer. Today marks the first day of the “Santa Claus rally.” It comprises the final five trading days of the year and the first two of the new year, during which the S&P, on average, sees gains of 1.3%, according to Jeff Hirsch, editor of the Stock Trader’s Almanac.
The seasonal strength’s proven so enduring that the S&P has seen declines only two times across the past 10 Santa rally periods, noted CNBC’s Robert Hum. And with the S&P up around 3% month to date, it looks like investors will have presents under the tree this year.
Happy holidays!