Stock Market Today: Monday Surge Sparks Santa Claus Rally Hopes

The S&P 500 notched its 69th closing high of 2021, and the Dow and Nasdaq also finished solidly green as traders returned from the long holiday weekend.

A Santa Claus in sunglasses holding a fan of 100-dollar bills and flashing a rock sign
(Image credit: Getty Images)

For many Christmas celebrators, any expectations for Saint Nicholas's generosity are realized (or not) on Dec. 25. But investors remain on alert for a week or so longer in hopes of a "Santa Claus rally" – and so far for 2021-22, their wishes have been answered.

Despite a holiday season that has been undermined by the omicron variant, disrupting travel plans and canceling get-togethers, stocks got off to a hot start Monday. Following up on earlier data out of South Africa suggesting the omicron variant is less lethal than its predecessors, additional studies from that country, as well as Scotland and England, similarly showed that omicron cases were less likely to result in hospitalization.

Wall Street responded with widespread buying; all 11 S&P 500 sectors finished in the green, pushing the index up 1.4% to a new record close of 4,791. The Dow Jones Industrial Average (+1.0% to 36,302) and Nasdaq Composite (+1.4% to 15,871) also ended the day higher.

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It's a promising start to that potential Santa Claus rally – a period of historical outperformance (opens in new tab) during the final five trading days of December and the first two days of the following January.

It's also a welcome bit of excitement in what should be a lackluster week from a data perspective.

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"There is virtually nothing on the calendar," says Michael Reinking, senior market strategist for the New York Stock Exchange. "In the U.S., the only impactful economic data is on Thursday with claims and the Chicago [purchasing managers indexes]. China PMI on Friday could get some attention if there is anyone still watching at that point."

stock chart for 122721

(Image credit: YCharts)

Other news in the stock market today:

  • The small-cap Russell 2000 improved by 0.9% to 2,261.
  • U.S. crude oil futures rose 2.4% to settle at $75.57 per barrel.
    Gold futures slipped 0.2% to settle at $1,808.80 an ounce.
  • Bitcoin joined in Monday's rally, gaining 0.6% to $51,252.57. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
  • GoDaddy (GDDY (opens in new tab)) was a big mover, jumping 8.4% after The Wall Street Journal (opens in new tab) said Starboard Value took a large stake in the domain registration firm. According to the report, which cited people familiar with the matter, the activist investor holds a roughly 6.5% position, worth roughly $800 million, and plans to find ways for GDDY to boost its share performance. Even with today's surge, the stock is down about 3% over the last 12 months.
  • Cruise stocks got knocked down after reports surfaced over the past few days that several ships were returning to port after discovering omicron outbreaks onboard. Among them were Royal Caribbean's (RCL (opens in new tab)) Odyssey of the Seas, which last Thursday reported 55 confirmed cases among passengers. RCL stock fell 1.4%, Carnival (CCL (opens in new tab)) gave back 1.2% and Norwegian Cruise Line (NCLH (opens in new tab)) dropped 2.6%.

Pros Say to Bank on Banks in 2022

A weakened COVID variant would do much for analysts predicting continued economic recovery in 2022 – and the sectors they see benefiting from it.

Cyclical sectors such as materials (opens in new tab) and energy (opens in new tab) are popular calls heading into the new year, but one of the most ballyhooed corners of the market going into 2022 is financials (opens in new tab). That's because the sector's banks and insurers are not only poised to benefit from additional economic expansion, but from an increasingly hawkish Federal Reserve that's projecting three increases to its benchmark interest rate in 2022.

"Financials have historically been the biggest beneficiary of higher interest rates as a result of a steeper yield curve and greater willingness to lend," says Global X Chief Investment Officer Jon Maier. "As rates trend upwards, banks tend to benefit from higher lending activity and higher interest rates charged to their consumers."

Like with many slices of the market, investors looking for broad, diversified access to the sector can do so via exchange-traded funds (ETFs) (opens in new tab), but those who want to make concentrated bets can start with our short list of 2022's top financial picks.

Read on as we explore the 12 highest-rated financial-sector stocks heading into the new year, and discuss why they appear likely to follow up 2021's outperformance with even more gains in 2022.

Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.