- Major U.S. indexes advance; chip stocks outperform
- All major S&P sectors rise: energy, tech lead
- Dollar ~flat; gold, crude, bitcoin higher
- U.S. 10-Year Treasury yield slips to ~1.48%
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S&P 500 ENDS AT RECORD HIGH; DJI, NASDAQ JUST SHY (1600 EST/2100 GMT)
The S&P 500 index (.SPX) ended at a record high on Monday, as strong U.S. retail sales underscored economic strength and eased worries from Omicron-driven flight cancellations that hit travel stocks.
Monday marked the 69th record finish for the SPX in 2021. That’s the second most record closes for the benchmark index in a single year. The all-time high was 77 set in 1995.
The major averages have now all advanced for four-straight days. With this, the Dow Industrials (.DJI) finished about 0.4% below its 36,432.22 record close set on Nov. 8, and the Nasdaq Composite (.IXIC) closed around 1.2% shy of its Nov. 19 record finish of 16,057.437.
That said, it was another subdued session in terms of share turnover. With the market settling, volume on U.S. exchanges is just 7.73 billion shares, putting on track to be the slowest trading day of the year. The average for the full session over the last 20 trading days is around 11.7 billion shares.
Here is Monday’s closing snapshot:
INDIVIDUAL INVESTORS PLAY THE RATE-HIKE GAME (1322 EDT/1822 GMT)
As part of the most recent American Association of Individual Investors (AAII) Sentiment Survey read more , AAII asked its members if the Federal Reserve should raise interest rates three times in the next year.
AAII reported that more than half of respondents (55%) said that raising interest rates three times in 2022 is “the right thing to do to curb inflation and slow consumer spending.”
Conversely, 27% of respondents disagreed with raising the rate three times. Many of these respondents think raising interest rates just twice is the better option.
Meanwhile, 7% of respondents had a neutral or mixed outlook, while 6% of respondents had a conditional response, with rate hikes warranted if certain factors develop.
Here are a couple of quotes from investors on the matter:
“Yes. Inflation is out of control.“
“No idea; what is the purpose? If they are trying to control inflation, then it might backfire.”
BULLISH SENTIMENT ON THE REBOUND (1202 EST/1702 GMT)
The percentage of investors with a bullish short-term outlook for the U.S. stock market rebounded into its typical historical range last week in the latest American Association of Individual Investors Sentiment Survey (AAII). With this, there was a decline in the number of investors describing their outlook for stocks as “bearish.”
AAII reported that bullish sentiment, or expectations that stock prices will rise over the next six months, rose 4.3 percentage points to 29.6%. It was the fifth consecutive week that bullish sentiment remained below the historical average of 38.0%.
Bearish sentiment, or expectations that stock prices will fall over the next six months, fell by 5.4 percentage points to 33.9%. Even with the decrease, it was the fifth consecutive week that pessimism was above its historical average of 30.5%.
Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, gained by 1.1 percentage points to 36.6%. It was the third consecutive week that neutral sentiment was above its historical average of 31.5%.
AAII noted that all three sentiment indicators were within their typical historical ranges.
With these changes, the bull-bear spread rose to -4.3 from -14.1 in the prior week read more :
S&P 500 NOTCHES NEW HIGH (1003 EST/1503 GMT)
The S&P 500 (.SPX) hit a fresh record high early Monday, as strong retail sales underscored the strength of the economy and overshadowed worries from Omicron-driven flight cancellations.
With this, the main U.S. indexes are all on track to rise for a fourth-straight day, as investors look for a Santa Claus rally to place more gifts under the market’s tree. read more
Indeed, the SPX has extended as high as 4,755.70, exceeding its Nov. 22 record intraday high of 4,743.83.
Under the surface, chips (.SOX) and FANGs (.NYFANG) are among outperformers. Retail stocks (.SPXRT) are up just slightly. Airlines (.XAL), and small caps (.RUT) are under pressure.
Here is where markets stand in early trade:
BROADER NASDAQ: DUE FOR MORE THAN A FEW-DAY BOUNCE? (0900 EST/1400 GMT)
The Nasdaq Composite (.IXIC) gained more than 3% last week. read more
With this, one measure of internal strength, the Nasdaq McClellan Summation (McSum), which is based on advancing and declining issues, posted back-to-back up days on Wednesday and Thursday for the first time in more than a month read more :
The McSum ended last Tuesday at -5,106, which was its lowest level since early-April 2020. The question now is – whether this measure became sufficiently washed out that the broader Nasdaq can go the other way, and see a period of sustained strength.
Even with its sudden rise, the McSum still needs to reclaim its descending 10-day moving average (DMA), but there certainly is room for it to rise before it would meet the resistance line from its early-2021 peak, or its June/November highs.
That said, a break of last Tuesday’s low would suggest its downtrend was resuming. Its December-2018/March-2020 lows were in the -5,425/-6,207 area. A decline to the late-2008 trough/support line from 2012 would call for the -6,896/-7,100 area. The support line from 2012 contained the 2018 and 2020 weakness.
Meanwhile, another measure, the Nasdaq New High/New Low (NH/NL) index has fallen back below its 10-DMA. However, at 19.8%, it remains above its early-December trough at 12.5%, which was also its lowest level since early-April 2020. read more
In any event, CME e-mini Nasdaq 100 futures are quoted up around 0.5% ahead of the open, and on track to rise for a fourth-straight day. read more
LIVE MARKETS EUROPE TO RETURN ON DECEMBER 29: read more
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Terence Gabriel is a Reuters market analyst. The views expressed are his own
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