Market Insights

Santa Claus was naughty and nice for investors last week, delivering one of the craziest Christmas weeks ever.

It started with the S&P 500 plunging to its lowest level in 16 months. The index then reversed to enjoy its biggest one-day rally in almost 10 years. Volatility spiked to its highest level since the market’s jaw-dropping swoon in February. Pretty impressive for just 3-1/2 days of trading!

By the time it was all said and done, the index registered a 2.9 percent gain between Friday, December 21, and Friday, December 28. It was the S&P 500’s first advance in four weeks, but it’s still on pace for its worst month this decade.

“Growth” stocks led the charge: E-commerce, retailers and software. This is the same group that led the market higher most of 2018, and then dragged everything lower in a manic end to the year.

Speaking of that, the S&P 500 is down 14.7 percent since the end of September. Depending on where it closes today, it will vie with the worst quarter since July-September 2011 (down 14.3 percent), or October-December 2008 (down 22.5 percent).

Plenty of events are impacting sentiment. The federal government is in a partial shutdown as President Trump plays hardball with the House of Representatives’ incoming Democratic majority. Uncertainties regarding trade also continue with two months until the White House potentially doubles tariffs on Chinese goods.

Those jitters have lifted precious metals. Gold futures (@GC) are back to their highest price since June and silver (@SI) is probing levels from August. Associated miners are also among the few winning stocks this month.

Economic data has yet to confirm the worst anxieties. Initial jobless claims were lower than expected for the third straight week, MasterCard said holiday sales increased at the sharpest pace since 2011 and rail traffic continues to rebound.

S&P 500 with moving averages and daily changes.

Four members of the S&P 500 rose almost 10 percent last week to compete for the top of the list: biotech Nektar Therapeutics (NKTR), heart-device maker Abiomed (ABMD), cloud-software giant Salesforce.com (CRM) and retailer Kohl’s (KSS). None had any news.

Campbell Soup (CPB) led to the downside, crumbling more than 6 percent. The consumer-staple name is carrying plenty of debt after buying the maker of Snyder’s pretzels. Will the vultures swoop in next year?

This week is shortened by New Year’s Day tomorrow, and the government shutdown will likely delay some economic reports. Still, some key numbers are on the calendar.

ADP’s private-sector payrolls come out Wednesday. The next morning features mortgage applications, initial jobless claims, the Institute for Supply Management’s manufacturing index and construction spending.

Friday brings a speech by Federal Reserve Chair Jerome Powell. Monthly non-farm payrolls are scheduled, shutdown permitting. Crude oil inventories also shift to Friday because of gridlock in Washington.