🤔 US stocks tumble as #Bitcoin remains stuck at $95k. Is the Santa Rally already over?
Wall Street’s so-called Santa Claus rally seems to have tripped over its own feet, while Bitcoin, the supposed king of volatility, is just sitting there like a lump, stuck at $95,000. Is this how we’re ending 2024? Flat stock performance, stagnant Bitcoin, and investors gnawing on their nails instead of celebrating a year-end windfall?
The Dow barely scraped together a gain of 0.04%, the S&P 500 dipped by 0.02%, and the Nasdaq went completely nowhere. Treasury yields? Through the roof. The 10-year note hit its highest point since May, sitting at 4.58% before a late-day pullback.
This surge in yields is a big problem for growth stocks, especially tech giants, which have propped up the market all year. Now, the “Magnificent Seven” are wobbling, and with them, the hopes of a December rally.
🔸 Santa Claus rally hits a brick wall
For those who don’t obsess over market quirks, the Santa Claus rally is a cute little phenomenon where stocks rally in the final trading days of the year, thanks to low liquidity, year-end bonuses, and tax-loss harvesting. It started to look promising earlier this week.
Then reality smacked Wall Street upside the head. Mixed economic data, hawkish signals from the Federal Reserve, and geopolitical tensions quickly killed the buzz.
The Fed is holding firm on its less-than-dovish outlook for 2025, with way fewer rate cuts than markets were hoping for. Higher yields are squeezing growth stocks, which is terrible news for a market dominated by mega-cap tech.
The S&P 500’s top ten stocks now account for 40% of the index’s market cap, a level that blows past the peak of the Dot-Com bubble. If these giants stumble, the rest of the market doesn’t stand a chance.
New U.S. jobless claims data added to the tension. Initial claims dropped slightly, which sounds great, but ongoing claims climbed to their highest levels since 2021. Translation: People are losing jobs, and they’re struggling to find new ones.