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The holiday-shortened week will mark the start of the seasonal stock market rally. (0:18) Costs of ChatGPT improvement project skyrocketing. (4:06) How much did the “12 Days of Christmas” cost in 24 years? (5:14)
Investors will enjoy a holiday-shortened trading week. Stock and bond markets were closed for Christmas on Wednesday and will be closed early on Christmas Eve on Tuesday.
Despite the lack of big bucks, the Santa Claus rally is still worth watching.
Originally defined by the legendary Stock Trader’s Almanac in 1972, the Santa Claus Rally refers to the tendency of stocks to rise during the last 5 trading days of December and the first 2 trading days of January. So, it should start on Tuesday.
Dating back to 1969, the benchmark S&P 500 Index (SP500) has risen nearly 8 out of 10 times during that period, with an average gain of 1.3%.
So, is it all on the sled? Traders may be keeping quiet after last week’s Fed data turned what looked like a strong last month into a strong year.
“The Santa Claus rally that we typically see at the end of the year may happen earlier this year because there are few short-term catalysts to push stocks higher,” Abound Financial chief information officer David Laut said earlier this month.
Looking at the index trends, if there’s anything that can bring some holiday cheer, it’s the Dow Jones (DJI). It’s been hit hard, falling -4.6% in December and lagging the broader market’s gain of nearly 14% this year. The S&P is down -1.7% in the month following the Fed sell-off, so there’s still room for upside. But in 2024 the index has risen 24%.
There are other factors at play this time of year. Wolfe Research noted that the worst-performing stocks saw rebound trading as the tax-loss sell-off ended.
Historically, the worst-performing stocks outperformed the market by an average of about 250 basis points from the last two weeks of December through the end of January.
On the economic calendar, the Conference Board’s December consumer confidence index is due out on Monday, just in time for last-minute shopping. The index is expected to rise to 113.5 from 111.7 in November. However, the index is more likely to reflect political opinions than spending habits.
On Tuesday, November durable goods orders arrived in the premarket despite a shortened trading day. The headline figure is expected to decline by -0.3%, while the core figure (excluding transport) is expected to rise by +0.3%.
On Friday, November spending and income data were released, and Pantheon Macro economist Samuel Tombs noted that real consumer spending rose 0.3% monthly, “putting the annualized rate of growth in the fourth quarter expected to be between 2.5% and 3.0%.” %, down from Q3 levels” at a staggering 3.7%, but still very strong. “
“Having said that, most of the overall increase in November was attributed to a 1.8% rise in durable goods spending. Part of that was driven by very strong auto spending, which rose 2.3% for the month due to the replacement of vehicles damaged by hurricanes Helen and Milton. . But part of the reason may be that consumers are starting to buy in advance a variety of goods that may be affected by new tariffs imposed by the incoming Trump administration.
“If so, this may continue to support consumption of goods in the short term. But it will lead to returns after the threat of tariffs subsides or occurs,” he said.
The report was released along with the PCE price index, the Fed’s favored inflation gauge, which showed headline inflation rising less than expected at 2.4%, while core PCE remained at 2.8%. But what about Christmas inflation? More on that later.
In news this weekend, the Senate voted Saturday to pass a spending bill that would fund the government through mid-March and avert a government shutdown. President Joe Biden later signed the bill into law.
The Senate vote ends a chaotic funding process that involved multiple rejections and the looming threat of closure. The latest plan provides spending through March 14, extends the farm bill, provides additional aid to farmers and provides disaster relief to hurricane victims.
The Senate passed the bill early Saturday morning by a vote of 85 to 11. It passed the U.S. House of Representatives for the first time Friday night, 366-34.
OpenAI’s project aimed to be a major advance in the artificial intelligence that powers ChatGPT, but it’s behind schedule and costs are soaring.
The Wall Street Journal stated that the project, which has been underway for more than a year and a half and is officially known as GPT-5 and code-named Orion, may not work.
Microsoft (MSFT), OpenAI’s largest investor and closest partner, had expected to see a new model around the middle of this year.
OpenAI has hosted at least two large training sessions. Each time it takes months to add vast amounts of data, it’s designed to make Orion smarter. New problems were reported and the software fell short of researchers’ goals.
At best, Orion is better than OpenAI’s current offerings. But it hasn’t evolved enough yet to justify the huge expense of running a new model.
For income investors, Broadcom (AVGO) will go ex-dividend on Monday, with the payout date being December 31st.
Dividend darlings Philip Morris ( PM ) and Altria ( MO ) and Southwest Airlines ( LUV ) are set to go ex-dividend on Thursday. Altria paid on January 10, Philip Morris on January 13, and Southwest on January 16.
On Friday, American Tower (AMT) will go ex-dividend, with the payout date being February 3rd.
Here at Wall Street Research Corner, we’re doing what we promised to look at Christmas inflation.
For the past 41 years, PNC has calculated the “True Cost of Christmas” based on the price of gifts in the song “The 12 Days of Christmas.”
This year, the Christmas price index increased by 5.4% compared with the same period last year.
“Believe it or not, even nearly five years later, we are still seeing the causal link between the pandemic-inflation hangover,” said Amanda Agati, chief information officer of PNC Asset Management Group. “With prices rising sharply over the years, we think that through There is no escape from the inflation, but we were wrong and the latest PNC CPI accurately reflects what we are seeing in the market.
In U.S. dollars, the purchase price for all 364 gifts in the song rises to $209,272. Last year, its sales price exceeded $200,000 for the first time.
The biggest increase in inflation was in the price of pear tree partridges, which increased by 16%. Six Goose Eggs are up 15.4%, and Eleven Pipers (as measured by the Philadelphia Area Musicians Alliance) are up 15.8%.
Two turtledoves, four songbirds, five gold rings, seven swimming swans, and eight milking maids were all equal.
Excluding the more volatile swans, the core Christmas index rose 7.5%.
