The stock market gave investors an unexpected Christmas gift last week, sending the main US equity indexes into the long holiday weekend with a Santa Claus rally, gaining new highs for the year and reaching a winning streak for five days, as markets closed in the US early last Thursday.
There is a good chance that the upcoming, holiday-shortened last week of 2009 will experience a continuation of the rally, on a similar super-light volume that marked the trading that happened last week, with little in the way of economic data or other news expected to affect the present upbeat momentum.
“A quiet week for certain, with so many people away, but if we put in another week of quiet gains like we had last week, I don’t think anyone will complain,” said Stifel Nicolaus’ investment strategist, Joe Battipaglia. “This is a nice way to finish out the year, before we have to get back to work and re-position for the coming year.”
In terms of the year-end rallies, the stock market has tradition on its side, with the final week of the year yielding a more positive return over the last two decades. “The drift tends to favour the bulls during the holidays, if for no other reason than people tend to be in a more optimistic frame of mind.”
“The last week of the year will be an opportunity for everyone to rest up after a tumultuous year,” said Michel Arbott, a trader at Gruntal, & Co, who sounded as if he had one foot already out of the door.
During the shortened session last Thursday, stocks fared well, though there appeared to be few to enjoy the gains around Wall Street – just 287 million stakes exchanged hands on the NYSE, way under the 1.4 billion in 2009.
In the wake of the lowest number of initial jobless claims in over a year, the Dow Jones soared 0.51 percent or 53.66 points, to close at 10,520. The S&P 500 earned 0.53 percent or 5.89 points, to close at 1,126.48. The Nasdaq Composite advanced 0.71 percent or 16.05 points, to close the week at 2,285.
For the week, The Dow gained 1.9 percent, placing it nearly 20 percent for 2009 and 61 percent since early March. The S&P 500 increased 2.2 percent and is currently up by 24 percent for 2009 and 66.5 percent since March. The Nasdaq surged 3.4 percent, and is now up 45 percent for 2009, and 80 percent over the last nine months.
The last four days of trading for this year will offer investors a few economic reports to ponder.
“But there’s not much in the data for traders to really sink their teeth into. That’s going to have to wait until the New Year,” Mr. Arbott said. “There might be some last minute tax-loss selling, although that will likely be balanced out by fund managers looking to do a little ‘window dressing’ on their portfolios.”