The stock market had a bad day last Friday as the Dow Jones Industrial Average fell over 330 points, or .77%, the Standard & Poor’s 500 Index dropped 1.11% and the NASDAQ Composite shed 1.49%. Factors behind the day’s decline included both profit-taking and year-end tax-loss selling. Despite the down day on Friday heading into the weekend, all three major indices finished out the week in positive territory.
For the week – the Dow rose .4%, and broke its 3-week losing streak, to finish at 42,992 – the S&P added .7%, after posting a joyous Christmas Eve rally, to 5,971 – while the NASDAQ Composite gained .8% to 19,722. Weekly gains were likely limited somewhat by recently rising Treasury yields, with the benchmark 10-year note now yielding around 4.63% . Higher interest rates increase the cost of capital and provide more competition to stocks, making bonds relatively more attractive.
While Christmas is already over, many investors are still watching intently for a Santa Claus Rally. The Santa Clause Rally is the market’s historically positive performance during the final five trading days of the year and the first two trading days of January. Over this period, since 1950, the Standard & Poor’s 500 Index has gained an average of 1.3%, rising 77% of the time, according to data from Dow Jones. So even though we are transitioning into January, we are still hoping that Santa Claus is Comin’ to Town, or more specifically, to Wall Street.
Looking a bit further out, the next major economic report will be the December Jobs Report, scheduled to be released on January 10th. Also, believe it or not, another earnings season is just around the corner. For the fourth quarter of 2024, the estimated year-over-year earnings growth rate for the S&P 500 is 11.9%, which if 11.9% is the actual growth rate for the quarter, it will mark the highest (year-over-year) earnings growth reported by the index since the fourth quarter of 2021 – according to data from FactSet.
As a reminder, the financial markets are closed this Wednesday, January 1st, in observance of New Year’s Day.
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We wish you a Happy, Healthy, & Prosperous New Year!
All the best – Southport Station Financial Management, LLC