[New York Stock Market] Mixed Close in Narrow Range Amid Declining Volume... Will the Santa Rally Come?

US Treasury yields ease, narrowing losses... Dow rebounds
Continuing jobless claims hit 3-year high

The three major indices of the U.S. New York stock market closed mixed near the flat line on the 26th (local time), the day after the Christmas holiday. The market, which had fallen early in the session due to rising U.S. Treasury yields, reduced its losses in the afternoon as Treasury yields stabilized, and the Dow Jones Industrial Average (Dow) managed to rebound. Despite thin trading and no clear direction, expectations for a 'Santa Rally' remain alive.

On this day in the New York stock market, the blue-chip-focused Dow closed at 43,325.8, up 28.77 points (0.07%) from the previous trading day. The large-cap S&P 500 index fell 2.45 points (0.04%) to 6,037.59, and the tech-heavy Nasdaq index dropped 10.77 points (0.05%) to 20,020.36.

By individual stocks, Alibaba rose 0.58%. The news that Alibaba International and Shinsegae Group are establishing a joint venture in Korea and incorporating Gmarket and AliExpress Korea as subsidiaries to strengthen their e-commerce market presence acted as a positive factor. Apple increased by 0.32%. Wedbush Securities raised its price target from $300 to $325, anticipating a surge in iPhone replacement demand driven by Apple's artificial intelligence (AI) service, 'Apple Intelligence.' Nvidia fell 0.21%, and Tesla dropped 1.76%.

With trading volume significantly reduced due to the year-end holiday season, the New York stock market was heavily influenced by movements in Treasury yields. When the 10-year U.S. Treasury yield, a global bond yield benchmark, surpassed 4.6% in the morning, investor sentiment weakened, causing the indices to fall early in the session. However, yields reversed downward in the afternoon, reducing the market's losses. Currently, the 10-year U.S. Treasury yield stands at 4.58%, and the 2-year yield, sensitive to monetary policy, is at 4.33%, both lower than in the morning.

Investors' attention is focused on whether a Santa Rally will unfold. A Santa Rally refers to the phenomenon where the stock market rises during the last five trading days of the year and the first two trading days of the new year. On the 24th, the New York stock market rose across the board, boosting expectations for a Santa Rally. Notably, the S&P 500 rose 1.1%, which Bespoke Investment Group analyzed as the largest increase on Christmas Eve since 1974. This week, the S&P 500 has risen 1.8%, while the Dow and Nasdaq have increased by 1% and 2.3%, respectively.

On Wall Street, opinions on the Santa Rally are divided between optimism and caution. Whether the Santa Rally occurs significantly influences investor sentiment in January of the following year, so the market is closely watching the year-end market direction.

Michael Jin, Senior Portfolio Manager at UBS Wealth Management, said, "The Santa Rally may still be alive and well, but it could also be a tough sled to ride," adding, "With no institutional trading volume and retail investors leading, what happens at year-end does not necessarily serve as an indicator for January and February."

Jonathan Krinsky, Chief Market Technician at BTIG, said, "The market may continue its upward trend through the end of the year, with the S&P 500 breaking through 6,100 to reach new highs," but he also warned, "This could be a warning sign, and volatility may increase again in January next year."

The U.S. continuing jobless claims released on this day reached the highest level in three years, indicating signs of labor market slowdown. According to the U.S. Department of Labor, continuing jobless claims for the week of December 8-14 were 1.91 million, exceeding both the revised previous week's figure (1.864 million) and market expectations (1.88 million). This is the highest level in three years. New jobless claims for the week of December 15-21 were 219,000, below both the revised previous week's figure (220,000) and expert forecasts (223,000).

Eliza Winger, an economist at Bloomberg Economics, analyzed, "The prolonged unemployment period for laid-off workers has caused a sharp increase in continuing jobless claims," indicating a slowdown in the labor market.

International oil prices fell as expectations for additional economic stimulus measures from China weakened. West Texas Intermediate (WTI) crude closed at $69.62 per barrel, down $0.48 (0.68%) from the previous day, and Brent crude, the global oil price benchmark, closed at $73.26 per barrel, down $0.32 (0.43%).