December 24th Market Overview

Happy Tuesday everyone.

The markets are spreading some holiday cheer this Christmas Eve, with Hanukkah's celebration set to begin tomorrow evening. Today's shortened session brings us some Holiday green as we kick off the traditional Santa Claus rally period.

Tech stocks leading the sleigh, particularly semiconductors. I hope everyone has a wonderful holiday

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Let's dig in...

Executive Summary

• Markets demonstrate broad-based strength in holiday-shortened session with the S&P 500 advancing 0.86%
  

• Tech sector momentum continues with $TSLA ▲4%, extending its impressive December gain of 30%
  

• Historical Santa Claus rally period begins today, typically yielding 1.3% returns according to LPL Research
  

• Banking sector heats up as major institutions challenge Fed’s stress test procedures
  

Market Overview

Key Market Drivers

1. Trading volumes remain thin with market's early 1 PM ET closure
   

2. Santa Claus rally period begins, sparking positive sentiment
   

3. Tech sector momentum continues with $TSLA, $AMZN, and $NVDA all gaining >1%
   

4. Banking sector attention increases as major banks and business groups file lawsuit against Federal Reserve over annual stress test requirements, citing concerns about inconsistent capital restrictions

Stock Spotlight (Tech monthly gains really closed this year out)

• $TSLA maintains December momentum with ▲4% gain today, bringing month-to-date performance to ▲30%
  

• $AVGO extends remarkable December push ▲2%, up around ▲46% this month
  

• $GOOGL demonstrates continued strength with December gains reaching ▲16%
  

• $AAPL builds on solid monthly performance, now ▲10% in December
  

• $AMZN joins tech rally with ▲1% advance

Big Name Updates

• $AAL recovers from early volatility after technical issues forced temporary flight groundings this AM on Christmas eve

• $HMC gains ▲2% following formal merger discussion announcement with Nissan

• $FSLR identified by Trivariate Research as significantly undervalued heading into 2025

Other Notable Company News

• $MAT faces headwinds with ▼5% year-to-date decline despite strong holiday sales reports (Mattel toys)

• $HAS Hasbro shows mixed performance: ▲14% year-to-date gain but ▼11% month-to-date decline

• Jefferies reports encouraging toy sector sales data, noting depleted inventory levels and strong board game sales

Sector Watch

Bond Market

Treasury yields continue pushing higher, with the 10-year note reaching 4.613%, its highest level since May 30. The 30-year yield climbed to 4.808%, marking its highest point since April 26. This movement follows last week’s significant yield increases triggered by the Feds updated rate-cut projections for 2025.

Policy Watch

Major banks and financial institutions have initiated legal action against the Federal Reserve regarding annual stress tests. The lawsuit challenges what they describe as inconsistent capital requirements and restrictions, potentially impacting future banking sector regulations and monetary policy implementation.

What to Watch

1. Santa Claus Rally Development:

• Historical data shows 1.3% average returns during this period

• Market behavior in final five trading days crucial for maintaining momentum

2. Tech Sector Leadership:

• Monthly gains of key players: $TSLA ▲30%, $GOOGL ▲16%, $AAPL ▲10%

• Semiconductor strength particularly notable with $AVGO ▲46% MTD

3. Bank Stress Test Implications:

• Potential impact on financial sector regulations

• Banking group lawsuit developments

• Possible effects on capital requirements

4. Holiday Retail Performance:

• Early indicators from Jefferies showing strong toy sector sales

• Board game category performing particularly well

• Inventory levels lower than seasonal norms

P.S. 

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Happy Holidays 🙂

- John