Wall Street’s post-holiday pause: stocks waver as volume dips

Following a robust Christmas Eve performance, the stock market experienced a subdued session on Thursday, as mixed jobless claims data provided little impetus for significant moves.

The S&P 500, while managing to claw back some of its earlier losses, struggled to gain meaningful traction, amidst light trading volume due to closures in major European markets.

This quiet session reflects a market taking a breather before the year’s end, with eyes now turning to the potential for volatility in the New Year.

Market focus turns to 2025

Wall Street largely shrugged off the latest economic readings, which included a rise in recurring applications for US unemployment benefits to a three-year high, indicating that it is taking longer for the unemployed to secure new jobs.

In contrast, initial claims for unemployment ticked down to 219,000 for the week ending December 21st.

Kenny Polcari at SlateStone Wealth told Bloomberg, “Eco data is a non-event until we move into the new year. Christmas is behind us, but the New Year is ahead of us. Volumes will remain muted.”

This sentiment underscores the market’s shift in focus from current economic data to future prospects and potential risks.

Year-end rally or January volatility?

While the market has been exhibiting strength, reaching new highs is a key point of discussion among analysts, who hold differing views on the market’s trajectory.

While Jonathan Krinsky at BTIG believes that the S&P 500 can continue to make upside progress into year-end and potentially reach a new all-time high above 6,100, he also anticipates that volatility will re-emerge in January.

Krinsky told Bloomberg, “If the S&P 500 does make new highs, there are going to be massive divergences in breadth and momentum, which is another red flag as we get into January.”

This observation suggests that the current rally might be masking underlying weaknesses in the market.

Megacaps mixed, GameStop surges: a look at market movers

The S&P 500 hovered near 6,035, while the Nasdaq 100 slid 0.1%, and the Dow Jones Industrial Average remained largely unchanged.

Most megacap stocks experienced a decline, except Apple Inc. which outperformed after a bullish note from Wedbush.

GameStop Corp., a meme-stock favorite, rallied after an X post from Keith Gill, also known as Roaring Kitty.

These movements reflect the ongoing dynamics within the market, highlighting both established players and those driven by retail interest.

Treasury yields dip, dollar rises, Bitcoin falls

The yield on 10-year Treasuries dipped two basis points to 4.57%.

Meanwhile, the Bloomberg Dollar Spot Index rose 0.1%.

In the cryptocurrency market, Bitcoin sank as traders reduced their risk exposure following a record-breaking run, reflecting the impact of the Fed’s cautious outlook on speculative investments.

Strategic moves and analyst upgrades

Alibaba Group Holding Ltd. announced an agreement to merge its South Korean operations with E-Mart Inc.’s e-commerce platform, aiming to improve their competitiveness in the country’s online retail sector.

Progressive Corp. was also upgraded to outperform from market perform at Raymond James, citing the company’s “long-term record of growth and value creation” as a solid rationale for it to be considered a core holding for large-cap growth investors.

Key events and market data:

Upcoming key events include Japan’s Tokyo CPI, unemployment, industrial production, and retail sales, along with US goods trade data, all scheduled for Friday.

In terms of specific market data, the S&P 500 remained largely unchanged, while the Nasdaq 100 fell 0.1%, and the Dow Jones Industrial Average remained similarly flat.

The Bloomberg Dollar Spot Index edged up 0.1%, while the euro remained steady at $1.0416.

The British pound fell 0.3% to $1.2521, while the Japanese yen fell 0.4% to 157.98 per dollar.

In the cryptocurrency market, Bitcoin fell 3.1% to $95,412.59, and Ether fell 4.2% to $3,318.68.

The yield on 10-year Treasuries declined two basis points to 4.57%, while the yield on Germany’s 10-year was unchanged at 2.32% and Britain’s 10-year was also unchanged at 4.58%.

West Texas Intermediate crude fell 0.9% to $69.44 a barrel, while spot gold rose 0.6% to $2,633.44 an ounce.

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