Market Overview

The stock market registered gains during a holiday-shortened week. Trading hours were reduced, with the market closing at 1:00 p.m. ET on Tuesday and remaining closed on Wednesday for Christmas Day. The "Santa Claus rally" period began on Tuesday, typically characterized by positive market trends, though not guaranteed. The S&P 500 rose by 0.7%, the Dow Jones Industrial Average by 0.4%, and the Nasdaq Composite by 0.8% over the week.

Market Activity

• There was limited market-moving news, and trading volume was thin ahead of another short trading week.
• The equal-weighted S&P 500 saw a slight increase, supported by gains in mega caps and chipmakers.
• NVIDIA (NVDA) increased by 1.7%, Tesla (TSLA) by 2.5%, and Broadcom (AVGO) surged 9.5%.
• Qualcomm (QCOM) rose 2.9% after a favorable jury decision regarding its agreement with Arm Holdings (ARM).
• Eli Lilly (LLY) climbed 2.0% following FDA approval of Zepbound (tirzepatide) for obstructive sleep apnea treatment in adults with obesity.

Economic Data

• The economic calendar was light, with a notable weekly jobless claims report. Initial claims for the week ending December 21 were 219,000, below the consensus of 232,000.
• Continuing claims reached 1.910 million, the highest since November 13, 2021.

Monday's Market Performance

The major indices recorded gains at the beginning of the holiday week. Although Monday wasn't part of the official "Santa Claus rally," many stocks performed well. The Dow Jones Industrial Average ended 0.2% higher, while the S&P 500 and Nasdaq Composite increased by 0.7% and 1.0%, respectively.

Economic Reports on Monday

• November Durable Orders fell by 1.1%, against a consensus of -0.3%, but prior figures were revised up to 0.8% from 0.2%.
• Durable Goods excluding transportation decreased by 0.1%, missing the consensus of 0.3%.
• December Consumer Confidence was 104.7, lower than the consensus of 113.5.
• November New Home Sales increased to 664K, slightly below the consensus of 670K.

Tuesday's Market Activity

On Tuesday, the official start of the "Santa Claus Rally," all major indices saw gains on low NYSE volume. The consumer discretionary sector led with a 2.6% increase, driven by Tesla (TSLA) and Amazon.com (AMZN). The information technology sector rose by 1.0%, supported by Apple (AAPL), Microsoft (MSFT), NVIDIA (NVDA), and Broadcom (AVGO). Airline stocks, except American Airlines (AAL), performed well, with Delta Air Lines (DAL) and United Airlines (UAL) among the top performers.

Thursday's Market Trends

The session was subdued, with indices hovering around previous closing levels. The Russell 2000 outperformed, rising by 0.9%, indicating speculative buying in a thin market. Mega cap stocks experienced choppy trading, contributing to mixed index movements.

Economic Data on Thursday

• Weekly Initial Claims were 219K, slightly below the consensus of 232K.
• Continuing Claims were revised to 1.910 million from 1.874 million.

Friday's Market Decline

The market faced broad selling pressure on Friday, with the Dow Jones Industrial Average dropping over 500 points at its low and closing 333 points down. The S&P 500 fell by 1.1%, and the Nasdaq Composite declined by 1.5%. The retreat was marked by profit-taking as the year-end approached, and significant declines in mega caps impacted overall performance. The CBOE Volatility Index rose to 16.10, indicating heightened market volatility expectations.

Guru Stock Picks

Invesco EQV European Equity Fund has made the following transactions:

• Reduce in XMAD:CAF by 18.66%
• Sold out in LSE:HAS
• Add in TEVA by 8.56%
• New position in MIL:AMP

Harbor Capital Appreciation Fund has made the following transactions:

• Reduce in ISRG by 22.11%
• Sold out in CMG
• Add in XTER:ADS by 125.05%
• New position in VRT

Hennessy Japan Fund has made the following transactions:

• Reduce in TSE:8630 by 7.7%
• Sold out in TSE:7741
• Add in TSE:8591 by 4.08%
• New position in TSE:8411

Hennessy Japan Small Cap Fund has made the following transactions:

• Reduce in TSE:6638 by 41.9%
• Sold out in TSE:3360
• Add in TSE:2157 by 10.95%
• New position in TSE:7817

Carl Icahn has made the following transactions:

• Reduce in SWX by 12.61%
• Add in UAN by 0.18%

Warren Buffett has made the following transactions:

• Reduce in BAC by 1.12%
• Add in OXY by 3.49%

Today's News

Taiwan's Ministry of Science and Technology announced potential funding cuts exceeding $600M for semiconductor, AI, and aerospace projects by 2025. This move, driven by opposition parties reallocating funds to local municipalities, could impact international partnerships with companies like Micron (MU), Advanced Micro Devices (AMD), and Nvidia (NVDA), which have ongoing collaborations with the Taiwanese government.

In a geopolitical development, China imposed countermeasures on U.S. companies providing military aid to Taiwan, including Boeing's (BA) Insitu and RTX's (RTX) Raytheon units. These firms will face asset freezes in China following the U.S. President's authorization of $571.3M in defense support for Taiwan.

Rigetti Computing (RGTI) led gains among quantum computing stocks, surging 15% and amassing a $4.3B valuation despite modest revenue. Other quantum stocks like Quantum Computing (QUBT) and D-Wave Quantum (QBTS) experienced mixed movements, highlighting the sector's volatile nature.

Labor Smart (LTNC) acquired Go Fast Sports and Beverage Company, issuing 400M shares in a non-dilutive transaction. This acquisition aligns with Labor Smart's strategy to expand its lifestyle brand portfolio, with Go Fast operating as a standalone subsidiary.

Duke Energy (DUK) filed to recover $1.1B in costs related to hurricane response efforts in Florida. The recovery plan includes expenses for deploying crews and repairing infrastructure, which will result in increased bills for residential customers starting March 2025.

Taiwan Semiconductor (TSM) began mass production at its first Japanese plant, focusing on mature chip technologies. The company plans to expand its facilities in Japan to produce more advanced chips, reinforcing its position in the global semiconductor market.

Bristol-Myers Squibb (BMY) received FDA approval for an injectable version of its cancer drug Opdivo, branded as Opdivo Qvantig. This new formulation, developed with Halozyme's (HALO) technology, offers a more convenient administration option for patients.

Microsoft (MSFT) continues to explore AI models for its Copilot products, maintaining its partnership with OpenAI while integrating various AI technologies to enhance its software offerings.

UnitedHealth (UNH) and Amedisys (AMED) extended their merger agreement, delaying closure due to regulatory hurdles, including a DOJ lawsuit. The merger, valued at $3.3B, is now expected to close by the end of 2025.

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