Thursday was a nice break for the stock market after Wednesday, when it had its worst single-day drop in months. Following the start of the highly bullish Santa Claus rally period, the major indexes went back up. Small caps and tech stocks led the way.
Major Indexes Pare Gains But Close Firmly Higher
The gains were less than the session highs, but they were still better than Wednesday’s drop, when the S&P 500 fell 1.9%, which was the biggest drop since September.
Both the NYSE and Nasdaq saw less trade than they did on Wednesday. Market breadth was strongly positive, with more stocks going up than going down. On the Nasdaq, this difference was almost 2:1, and on the NYSE, it was 5:2.
Small Caps, Tech Stocks Lead the Rebound
Small caps did better than large caps; the Russell 2000 Index of small-cap stocks went up 0.9%. Also, the tech-heavy Nasdaq did better than the market as a whole.
After going down 2.5% on Wednesday, the Innovator IBD 50 ETF (FFTY), which tracks the 50 best-performing growth stocks, went up 1.1%. Micron Technology and Carnival Cruise Line were two of the IBD 50 stocks that went up the most.
10-Year Treasury Yield Rises Slightly
After going down early in the session, the 10-year Treasury yield went up by two basis points to 3.88%. It then stayed the same. This year, rising long-term rates have made stock prices less attractive, but on Wednesday, yields fell from their all-time highs as stocks rose.
Cruise Line Stocks Set Sail as Passenger Demand Strengthens
Thursday was a good day for cruise lines because Carnival beat earnings expectations and said that demand was returning. Carnival stock rose 5.7%, and it’s getting close to breaking out to new record highs.
Rivals Royal Caribbean and Norwegian Cruise Line both went up, with gains of about 4% each. In 2023, Royal Caribbean stock has already gone up more than 150% thanks to strong booking trends. The company is on track to have its best year ever.
Micron Jumps on Upbeat Earnings Report
Micron Technology, a company that makes memory chips, had the best results, with a 7% rise to a 15-month high. Its fiscal first-quarter numbers were much better than expected, and its guidance for the current quarter was also much better than what most people thought it would be.
Tesla’s price went up 1.4% as it continues to make what could be a double-bottom base pattern. But in Norway, the company that makes electric cars is being closely watched because their cars’ suspensions might not work right, which could lead to a recall.
Used Car Seller CarMax Rebounds From Early Loss
After showing mixed quarterly results, CarMax stock went from losing 12% at the start of the day to gaining 4%. Even though sales and comps didn’t meet estimates, the bottom line profit did.
The company also said it would start buying back its own shares again. CarMax shares are building what could be a cup base before the company reports earnings.
More Solid Corporate Earnings Reports
Beyond CarMax, stocks reacting to earnings news on Thursday included:
- Cintas: Up 6.4% to a record high after the corporate uniform supplier beat on earnings and lifted its full-year guidance.
- Apogee Enterprises: Rose 2.6% to hold above a buy point after the commercial glassmaker’s mixed quarterly report but raised profit outlook.
- Paychex: Plunged 6.6% in huge volume despite an earnings beat as sales lagged estimates.
Economic Data Shows Moderate Growth, Low Inflation
On the economic data front, reports painted a picture of resilient but more moderate growth coupled with easing inflationary pressures:
- Leading indicators fell 0.2% in November, an improvement from the prior month and matching forecasts.
- Q3 GDP growth was revised down slightly to 2.9% from 3.2%, roughly in line with expectations.
- The PCE inflation index cooled in Q3 to 3.2% from 3.6%, beating estimates.
- Jobless claims ticked up modestly to 205,000 last week but remain near 50-year lows.
Santa Claus Rally Kicks Off Friday
The extremely bullish Santa Claus stock market rally will begin on Friday, thanks to a strong recovery on Thursday.
Market experts pay close attention to this trend, which means that stocks tend to go up over the last five trading days of the year and the first two trading days of January.
Key facts and figures about the Santa Claus rally period:
- Start date: December 23 (Friday)
- End date: January 3
- Average S&P 500 gain: 1.3%
- S&P 500 positive 78.1% of the time
- Current S&P 500 win streak: 7 straight years
- Nasdaq also averages 1.3% gain, up 76.9% of time
After a rough market year, investors are hoping that Santa brings them some holiday cheer and that the major indexes can keep up their normally good run over the next two weeks.