Santa Claus Rally Boosts US Markets

The so-called ‘Santa Claus rally’ of trading in the week between Christmas and New Year once again boosted US markets. Stocks in sectors like energy and tech were among the big-hitters as the S&P 500, Dow Jones Industrial Average and tech-heavy Nasdaq Composite showed strong gains. All of which will round off a hugely successful year on the markets ahead of what could be a more uncertain 2022.

At the close of Tuesday’s trading, the S&P 500 had risen by 1.38%, the Nasdaq Composite made gains of 1.39%, and the Dow enjoyed a 350-point jump. It marked the second successive time in which the S&P had broken its previous record.

Apple was one of the major beneficiaries of this upward trend to close 2.3% higher with a stock price of $180.33. This brought the market cap of the tech giant up to $2.96 trillion, taking it achingly close to the $3 trillion benchmark.

Other big achievers included Crude oil that saw a 2.57% rise to hit $75.69 a barrel while Tesla enjoyed a remarkable jump in value of 3.52%. Another electric vehicle manufacturer – Rivian – was up by 5.73% in a fantastic day on the markets.

The final week of the year has long been dubbed the Santa Claus Rally as it has seen the value of stocks rising more often than not. In the last 92 years, the S&P 500 has enjoyed a rally 77% of the time during this period, and it produces an average gain of 2.66% over the seven-day period.

How long will the US economic rebound last?

The fact that the S&P 500 has gained more than a quarter in 2021 shows that the US economic recovery after the ravages of the Covid pandemic is well underway. With a rise in corporate earnings and minimal interest rates, the economic data suggests that things are progressing well.

However, many analysts point towards 2022 as being a much tougher year. The Federal Reserve is expected to raise interest rates three times next year in a bid to stave off skyrocketing inflation rates. Major price rises have been witnessed across the US in areas such as energy and rent.

Much will clearly depend on how the emergent Omicron variant of the virus plays out. It has already had a damaging impact on the travel industry with a huge number of flights across the US being cancelled over the festive period. As such, stocks in airlines were hard hit with Delta Airlines losing 0.98% and United Airlines stock falling by 0.89%.

However, there is real hope that the new mutation of the virus could be less severe than previous strains of Covid. All of which could provide a silver lining to what had been looking like another difficult year for the US economy.

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