In much the same way that Santa slides down the chimney and quietly places his gifts under the tree to bring cheer to many, the equity market has quietly put together a nice rally this week.  Entering today, the S&P 500 is up 2.8% for the week.

Not surprisingly, this action is being labeled a "Santa Claus" rally.  That's just fine, because the vernacular sure seems to fit this time of year. 

If this were Easter, the rally this week would probably be called a "Bunny Hop."  If this were the Fourth of July, the rally this week would probably be called a "Firecracker Rally."

Call it what you will.  A rally is a rally by any name, but in the true spirit of market parlance, this week's rally is not the "Santa Claus" rally.  According to the Stock Trader's Almanac, the last five trading days of the year and the first two trading days of the new year comprise the so-called Santa Claus rally period. 

That being the case, today marks the official start of the Santa Claus rally period, and so far it looks like Santa isn't going to need to call on Rudolph to guide his sleigh through the fog.

It is a mostly clear morning.  The S&P futures are trading 0.4% above fair value, foreign equity markets have shown some holiday spirit themselves, and Congress it seems has provided a stocking stuffer by agreeing to a two-month extension of the payroll tax cut and unemployment benefits.  Now, it just needs to pass the vote on this agreement.

A few clouds passed through on the economic front, but nothing that should ultimately interfere with Santa's trip.

Personal income increased 0.1% in November while personal spending jumped by a like amount.  The Briefing.com consensus expected income to be up 0.2% and spending to increase 0.3%.

Real PCE rose 0.2% in November on top of a 0.2% increase in October and a 0.5% gain in September.  This will be a positive input for Q4 GDP forecasts.

The recognition that the headline numbers weren't better than expected took a little steam out of the futures market, yet the larger point is that the real PCE gains will keep the U.S. economy on a growth path.

Following upward revisions to October, durable orders for November increased 3.8%, which was stronger than the Briefing.com consensus estimate of 2.0%.  That gain was driven primarily by a 73.3% increase in new orders for nondefense aircraft and parts and a 5.2% jump in new orders for primary metals.

Nondefense capital goods orders, excluding aircraft -- which is a proxy for business investment -- declined 1.2% on the heels of a 0.9% drop in October.   These orders, however, are still up 10.7% year-over-year.

Shipments of nondefense capital goods orders, excluding aircraft, dropped by 1.0%, which was the third straight monthly decline.   This will act as a drag on Q4 GDP forecasts, yet it does not carry the same weight as the impact of the real PCE increase noted above.

Another offsetting note is that unfilled orders for nondefense capital goods, excluding aircraft, increased 0.9% in November.  That came on top of a 1.0% gain in October and suggests shipments should resume an upward trend in the near future.

The New Home Sales report for November (Briefing.com consensus 313,000; prior 307,000) will be released at 10:00 a.m. ET. 

Even though the equity market is open for a full day today, that should be right about the time the traders who came in today will be heard exclaiming, "Merry Christmas to all, and to all a good night."

We'll play it forward and simply say they took the words right out of our mouth.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.