Shares open lower after ‘Santa rally’

On By Littum

Medha Singh and Purvi Agarwal
| Reuters

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Wall Street’s main indexes drifted lower in light trading volume Thursday as rising interest rates pressured some stocks as investors eyed a year-end boost from the so-called Santa Claus rally.

Treasury yields rose across the board, with the yield on the benchmark 10-year note hitting its highest mark since early May at 4.64%.

Among “megacap” stocks, Amazon.com fell 0.3%, while Meta Platforms fell 0.6%.

Price-sensitive property shares were among the worst hit, falling 0.4%, while consumer discretionary fell 0.5%.

“Now we’re at an inflection point for Treasury yields, especially the 10-year … any move higher and that tends to create weakness in the stock market, and that’s what I’m seeing this morning,” said George Cipolloni, portfolio manager at Penn Mutual Asset Management.

Dow Jones, S&P 500 and Nasdaq see opening losses

At 9:40 a.m. ET, the Dow Jones Industrial Average fell 123.50 points, or 0.30%, to 43,173.53, the S&P 500 lost 15.13 points, or 0.25%, to 6,024.91 and the Nasdaq Composite lost 2 points, or 0.45%, to 46%. 19,984.67.

Markets in Europe, London and parts of Asia were closed on Thursday.

The S&P 500 and Nasdaq ended Tuesday’s truncated session with a third straight day of gains, lifted by megacap and growth stocks.

Gains in Apple, Tesla, Alphabet, Amazon, Nvidia, Microsoft and Meta Platforms accounted for more than half of the S&P 500’s total return of 28.4% this year, according to S&P Dow Jones Indices senior index analyst Howard Silverblatt.

Without the Magnificent Seven stocks, the benchmark index’s total return would have been 13.2% in 2024, Silverblatt added.

US stocks have hit a speed bump this month after an election-led rally in November as they grapple with the Federal Reserve’s forecast of fewer rate cuts in 2025.

The three main indexes have hit several record highs this year on hopes of a lower interest rate environment and the prospect of artificial intelligence boosting corporate profits. However, investors are beginning to question the rally’s durability due to stretched valuations and as megacaps continue to attract more investor funds.

A ‘Santa rally’?

Still, investors are hoping for a typically strong finish in the final days of the year — dubbed the “Santa Rally,” a pattern attributed to low liquidity, tax-loss harvesting and the investment of year-end bonuses.

The S&P 500 has gained an average of 1.3% in the last five trading days of December and the first two days of January since 1969, according to the Stock Trader’s Almanac. A December without a Santa meeting has been followed by a weaker-than-average year, data from LPL Financial dating back to 1950 showed.

Meanwhile, a Labor Department report showed the number of new Americans filing for jobless benefits last week fell to 219,000, compared with the 224,000 economists had expected in a Reuters poll.

Cryptocurrency-related stocks fell after bitcoin fell over 3%. Coinbase Global fell 1.4%, while Riot Platforms and Mara Holdings fell over 2.4% each.

Declining issues outnumbered advancing ones by a 3.08-to-1 ratio on the NYSE and a 2.03-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and a new low, while the Nasdaq Composite posted 17 new highs and 24 new lows.