Markets closed early and volume was thin, but all three main equity benchmarks closed higher on Tuesday to mark the official start of the Santa Claus Rally.
Indeed, the tech-heavy Nasdaq Composite and the broad-based S&P 500 had their best Christmas Eve showings since 2000 and 2011, respectively, as all 11 sectors ended the holiday-shortened trading session in the green.
The closing bell at the New York Stock Exchange sounded at 1 pm Eastern in observance of Christmas Eve, and the bond market shut down at 2 pm. Note that the equity and bond markets have different holidays hours throughout the year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
There was no incoming data scheduled for release today, and the economic calendar will remain light through the holiday season. The earnings calendar is similarly sparse, though earnings reporting season will be upon us again in less than three weeks.
The Santa Claus Rally
The "Santa Claus Rally" is a real thing, identified in 1972 by Yale Hirsch, the founder of the Stock Trader's Almanac.
As Ryan Detrick of Carson Group explains, "One of the little-known facts about the Santa Claus Rally (SCR) is that it isn’t the entire month of December; it’s actually only seven trading days." It covers the final five trading days of the year and first two trading days of the following year.
Here's the good news: December 24 marks the official start of the Santa Claus Rally. "Historically, it turns out these seven days indeed have been quite jolly," Detrick writes, "as no seven-day combo is more likely to be higher (up 78.4% of the time), and only two combos have a better average return for the S&P 500 than the 1.29% average return during the official Santa Claus Rally period."
Big tech names once again led stocks higher on Tuesday. Tesla (TSLA) led the S&P 500 higher with a gain of 7.4%, while Super Micro Computer (SMCI) was the second-best-performing stock in the index, rising 6%. And Broadcom (AVGO) continued its remarkable rally by adding another 3.2%.
Netflix (NFLX) added 2.3% after KeyBanc analyst Justin Patterson reiterated his Overweight rating on the streaming giant and raised his 12-month price target to $1,000 from $785.
The Nasdaq Composite led the way higher on Christmas Eve, rising 1.4% to 20,031. The S&P 500 added 1.1% to 6,040, and the Dow Jones Industrial Average was up 0.9% to 43,297.
MicroStrategy wants to buy all the bitcoin
MicroStrategy (MSTR) enjoyed a 7.8% Christmas Eve rally after management said it will ask shareholders to authorize an increase in the amount of Class A common stock in the company from 330 million shares to 10.33 billion shares so it can buy more bitcoin.
MicroStrategy officially joined the Nasdaq-100 ahead of the open on Monday but closed the day down 8.8%.
MicroStrategy said in October that it would raise $21 billion in equity capital and $21 billion in debt capital to fund $42 billion in bitcoin purchases through 2026. In a preliminary proxy statement filed with the Securities and Exchange Commission, the company said it's executing that plan "significantly faster than originally anticipated."
Based on MSTR's closing price of $358.18, issuing 10.3 billion new shares would generate more than $3 trillion. The current market value of all the bitcoin trading in the world is just below $2 trillion.
Bernstein analyst Gautam Chhugani said in a recent note that he expects "more visibility and recognition beyond fresh ETF inflows" for MSTR based on its inclusion in the Nasdaq-100, adding that "the market will likely set its sight on S&P 500 inclusion for 2025."
Chhugani added that due to changes in accounting rules effective next year, MicroStrategy's unrealized bitcoin gains will help its prospects for inclusion in the S&P 500.
"With the Trump 2.0 administration dialing up its crypto focus with the nomination of a crypto friendly SEC chair and appointments of a Crypto/AI Czar," Chhugani concludes, "we believe the MSTR flywheel is going to further accelerate from here."
Chhugani has an Outperform rating and a $600 12-month price target for MSTR, implying 67.5% upside from the stock's closing price on Christmas Eve.
Related content
- How to Manage Portfolio Risk With Diversification
- How to Invest Your Holiday Cash
- Best Bitcoin and Crypto ETFs to Buy Now
-
Here's How the Child Tax Credit Could Increase Under TrumpTax Credits House Republicans released details for President Trump’s ‘one big, beautiful bill,’ and it includes an increased child tax credit.
-
New Overtime Tax Deduction Proposed for Millions Working Extra HoursTax Law Some lawmakers and President Trump want to offer overtime tax relief. But will a tax deduction or an exemption help you most?
-
April CPI Keeps Fed Rate Cuts on Hold for Now: What the Experts SayThe April CPI report is unlikely to change the Fed's wait-and-see approach to interest rates.
-
How to Turn Education Planning Into Retirement PlanningNervous about investing in a 529 plan? If college doesn't pan out, the money can now be rolled over into a Roth IRA, which will grow tax-free until retirement.
-
We Took Them in After the Fire, and Now They Won't LeaveA well-meaning older couple responded to a young couple's plea for help. Now they're looking at having to evict tenants rather than simply asking houseguests to go. How could this happen?
-
How Financial Advisers Can Help Clients Navigate the SSFAThe Social Security Fairness Act's big changes and new opportunities could require adjustments in tax strategy for some Social Security recipients.
-
Six Steps for Financial Advisers to Make Compliant Video TestimonialsFollowing these steps in order can help ensure you don't end up breaking any rules or having to redo your work.
-
Stock Market Today: Dow Gains 1,160 Points on U.S.-China Trade DealThe two countries agreed to a 90-day truce that will give them time to work on more substantive trade negotiations.
-
Why Has the IPO Market Gone Cold?Hopes were high that 2025 would see strong IPO activity, but the market has recently cooled. Here's why.
-
The Best Investing Advice for College GradsGetting a head start on investing can be intimidating for new college graduates, but doing so will pay dividends for their financial health down the road.
