Stocks suffered steep losses to start Christmas week, but a three-day recovery put one of the major benchmarks in record-high territory ahead of the long holiday weekend. (As a reminder, Christmas Eve is a full-day stock market holiday this year.)
Volume was lighter than usual Thursday, with many on Wall Street logging off to start their holiday celebrations early. However, there was still plenty of economic data to mull over for those who did stick around, including the latest reading on inflation.
The personal-consumption expenditures index – also known as the Federal Reserve's preferred price gauge – rose 5.7% year-over-year in November, the fastest pace since 1982. Excluding the volatile food and energy sectors, the index increased 4.7% on an annualized basis, the highest reading in 32 years.
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Also seen amid the onslaught of economic data released today was the latest update on consumer spending, which rose 0.6% month-over-month in November, slower than the 1.4% increase seen in October.
The major indexes all notched solid wins, with the S&P 500 Index's 0.6% gain to 4,725 enough for a new record high. The Dow Jones Industrial Average ended the day up 0.6% at 35,950, while the Nasdaq Composite rose 0.9% to 15,653.
Other news in the stock market today:
- The small-cap Russell 2000 jumped 0.9% to 2,241.
- U.S. crude oil futures rose 1.4% to settle at $73.79 per barrel.
- Gold futures gained 0.5% to finish at $1,811.70 an ounce.
- Bitcoin spiked 4% to $50,959.36. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Nikola (NKLA (opens in new tab)) soared 18.0% after the electric-truck maker made a post on Twitter late Wednesday. The tweet included pictures of a customer receiving a Tre battery-electric vehicle, with the caption "Our first customer delivery done, and more to come." NKLA stock has had a rough go of it in 2021, down more than 60% from its late-January record high above $30.
- Crocs (CROX (opens in new tab)) was a big decliner in today's trading, shedding 11.6%. The footwear maker said it would buy privately held rival Heydude in a cash-and-stock deal valued at $2.5 billion. "Heydude has experienced incredible growth in revenue and profits over the past few years," said Anne Mehlman, chief financial officer at Crocs. "Heydude is expected to be immediately accretive to our high revenue growth, industry-leading operating margins and earnings. We expect the combined business to generate significant free cash flow, enabling us to quickly deleverage while investing to support future growth. We are excited about the combination and are confident in our ability to deliver long-term shareholder value." The acquisiton is expected to close in the first quarter of 2022.
Ho! Ho! Ho!
Are we seeing the start of the Santa Claus rally? The S&P 500 ended the week up 2.3% – and the momentum could just be getting started, if history is any guide.
The "Santa Claus Rally is the final five trading days of the year and first two trading days of the following year," says Ryan Detrick, chief market strategist at LPL Financial. Going back to 1950, the S&P 500 has been higher 78.9% of the time over this seven-day stretch, averaging a 1.3% return, according to Detrick.
Why are these seven days so strong? "Whether optimism over a coming new year, holiday spending, traders on vacation, institutions squaring up their books – or the holiday spirit – the bottom line is that bulls tend to believe in Santa," he adds.
Seasonal tendencies such as these are great for investors looking to make short-term tweaks or aggressive bets, but investors looking for buy-and-hold solutions may want to be more tactical in their approaches. One way to do this is to follow what the so-called "smart money" is doing.
Recently, hedge funds and other billionaire investors like Warren Buffett released information about their latest trades. Read on as we uncover the highest-conviction stock picks smart-money investors made in the third quarter.
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