The news flow on the other side of the Christmas holiday has been predictably light. Meanwhile, the bias in the equity futures market on the other side of the Christmas holiday is oftentimes positive. Today, it is mixed.
Currently, the S&P 500 futures are up four points and are trading 0.1% above fair value, the Nasdaq 100 futures are down 22 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 72 points and are trading 0.2% above fair value.
We are in the midst of the Santa Claus rally period (last five trading days of the year and first two sessions of the year) and that is a time of year that often sees a positive bias as market participants take advantage of thinner trading conditions to do some bargain hunting in beaten up names.
This period does not always produce a net gain for the stock market, but when it does, it helps boost expectations for a positive start to the new year. Bear in mind, however, that the S&P 500 saw a net gain of 1.4% during the 2021 Santa Claus rally period and yet the S&P 500 declined 5.3% in January and 5.0% in the first quarter this year.
In other words, Santa isn’t always all that he is cracked up to be. That point notwithstanding, there is a buzz about the Santa Claus rally period every year, partially because the news flow this time of year is typically light and, well, market participants need something to buzz about.
Alas, this is the time of year when you hear words/phrases like rebalancing, bargain hunting, and window dressing a lot more to help explain any positive bias in the stock market and the aura of the Santa Claus rally period.
Today, though, there is a bit of a buzz in the market because of another move by China to distance itself from the economically-damaging zero COVID policy. Starting January 8, China will no longer require international travelers to quarantine upon arrival.
That is a good bit of news along with a report from Mastercard that SpendingPulse data indicate holiday retail sales (Nov. 1-Dec. 24) in the U.S. increased 7.6% year-over-year. That was better than an expected 7.1% increase, according to The Hill.
Some less exciting news involves airlines canceling thousands of flights over the holiday weekend (and into this week) because of the winter storm. Southwest Airlines (LUV), though, is in the eye of the storm today after it canceled more than 70% of its flights on Monday and said more cancellations will be made this week. Other airlines had significantly fewer cancellations on Monday. Shares of LUV are down 4.2%.
Another notable loser this morning is Tesla (TSLA). It is down 5.4% on a Reuters report that it suspended production at its Shanghai plant. Tesla’s (ongoing) losses are weighing heavily on the Nasdaq 100 futures along with modest declines in other mega-cap stocks.
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Originally Posted December 27, 2022 – Still buzzing about a potential Santa Claus rally
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