New York Stock Market Drops Across the Board Early in Trading... Eagerly Awaiting the 'Santa Rally'

Closing at 1 PM on the 24th, Closed on the 25th
Is a Santa Rally Coming for the Year-End and Early New Year Stock Market?

The three major indices of the U.S. New York stock market showed mixed trends in early trading on the 23rd (local time), the first trading day of the Christmas week. With trading volume expected to decrease ahead of the Christmas holiday, the market is anticipating a 'Santa Rally' where the stock market rises at the end of the year and the beginning of the new year.

As of 10:10 a.m. in the New York stock market on this day, the Dow Jones Industrial Average (Dow), centered on blue-chip stocks, was trading at 42,543.65, down 0.69% from the previous trading day. The S&P 500, focused on large-cap stocks, was down 0.34% at 5,910.59, and the Nasdaq, centered on tech stocks, was down 0.13% at 19,547.

This week, the New York stock market will operate on a shortened schedule or be closed in observance of Christmas. On Christmas Eve, the 24th, it will close at 1 p.m. Eastern Time, and it will be closed on Christmas Day, the 25th.

Market outlooks are divided on whether this year's Santa Rally will materialize, but investors still hold onto expectations for a year-end rally. According to stock analysis firm Stock Traders Almanac, the S&P 500 has risen an average of 1.3% during the last five trading days of the year and the first two trading days of the new year since 1969. Bank of America (BoA) analyzed that late December is the second strongest period for U.S. stocks during the year, and in years with presidential elections, the S&P 500 has risen 83% of the time in December.

Craig Johnson, Chief Market Technician at Piper Sandler, said, "The major upward trend in the market is still intact, so we have not given up on the possibility of a Santa Rally this year."

Last month's inflation was lower than expected, and U.S. President Joe Biden signed a temporary budget bill passed by Congress on the 21st, ending the federal government shutdown crisis for now, which eased market concerns. According to the U.S. Department of Commerce, the core Personal Consumption Expenditures (PCE) price index for November rose 0.1% month-over-month and 2.8% year-over-year, below experts' expectations of 0.2% and 2.9%, respectively.

However, pessimism that there will be no Santa Rally this year is also emerging. The U.S. Federal Reserve (Fed) has indicated a slower pace of interest rate cuts, and debates over the New York stock market's peak continue. Earlier, at the last Federal Open Market Committee (FOMC) meeting of the year on the 18th, the Fed significantly reduced its expected number of rate cuts next year from four times of 0.25 percentage points each (total 1.0 percentage point cut) to two times of 0.25 percentage points each (total 0.5 percentage point cut). There is also analysis suggesting that the year-end Santa Rally may have been priced in early due to the 'Trump Rally' that caused a sharp rise in the New York stock market after the election on the 5th of last month.

Matt Maley, Chief Market Strategist at Miller Tabak, diagnosed, "Investors are closing out the year facing the reality that the stock market is extremely expensive and the Fed will not be as cooperative as we thought."

By individual stocks, Qualcomm is up 1.67% on news of winning a patent infringement lawsuit against ARM Holdings. ARM Holdings is down 5.28%. Video sharing platform Rumble is soaring 63.7% on news that Tether is acquiring a stake in the company at $7.5 per share. AI leader Nvidia is up 0.99%. Apple and Tesla are down 0.27% and 0.11%, respectively.

Government bond yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 3 basis points (1 bp = 0.01 percentage points) to 4.55% compared to the previous trading day, and the 2-year Treasury yield, sensitive to monetary policy, rose 2 basis points to 4.33%.

International oil prices are falling. West Texas Intermediate (WTI) crude oil is down $0.34 (0.49%) to $69.12 per barrel, and Brent crude, the global oil price benchmark, is down $0.38 (0.52%) to $72.56 per barrel.