Yahoo Finance Yes Virginia, There Is a Santa Claus Rally
The year-end rally in the stock market continues unabated, apparently. This is traditionally a good week for stocks, but with such higher bidding since Halloween, we’re spending Christmas season amid the sweet smell of success. The Dow gained another +149 points today, +0.40% — and it was the worst-performing index of the majors. The S&P 500 grew +0.44% and the Nasdaq was up +82 points: +0.55%. The small-cap Russell 2000, however, leading the pack from the opening bell to the closing bell, gained +1.38% for the session.
The Russell has been performing so well, in fact, that it deserves a special note: going back to late October lows, the small-cap index was performing worse than all the others. Over the past six months, however, it leads all four major indices, even the tech-heavy Nasdaq, +11.4%. The Russell is up an astounding +26% from late October, largely thanks to signaled interest rate cuts from the Fed in 2024, which has provided a boosted to many regional banks, many of which are small-caps.
As we mentioned this morning, Case-Shiller Home Prices gained +4.8% year over year as of October, +0.8% month over month. This was all the more impressive with October 30-year fixed mortgage rates jumping to 8% — the highest levels since the early-Aughts. The housing industry has now recovered all of its losses from the difficult second-half of 2022, and currently mortgage rates are down to around 6.7%. Therefore, we can price in some further housing market strength — a positive for the economy, but one which won’t cause the Fed to shrink interest rate levels anytime soon.
Elsewhere, biopharma mergers have been grabbing headlines: after Friday’s proposed purchase of Karuna Therapeutics KRTX for $14 billion, Bristol Myers-Squibb BMY has opened its pocketbook to purchase late-stage cancer treatment developer RayzeBio RYZB for $4.1 billion today. Karuna stock ramped up +47% on Friday, while RayzeBio gained a whopping +100% today. Also, Astra Zeneca AZN is paying $1.2 billion for Gracell Biotech GRCL, maker of auto-immune therapies and cancer drugs, as of today. That smaller company is now up +60% on the news.
We do not expect any important economic reports to be released tomorrow, nor do we anticipate any major earnings releases. So the question is — as it has been: can this rally continue to last? Even if there is nothing propping it up for the near term and next year’s good news gets priced into the market for the Santa Claus Rally, will stocks keep pushing toward higher valuations? It remains to be seen.
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AstraZeneca PLC (AZN) : Free Stock Analysis Report
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Karuna Therapeutics, Inc. (KRTX) : Free Stock Analysis Report
Gracell Biotechnologies Inc. Sponsored ADR (GRCL) : Free Stock Analysis Report
RayzeBio, Inc. (RYZB) : Free Stock Analysis Report
