EmailThe week leading up to Christmas was a banner week for the U.S. equity market. The S&P 500 surged 3.7% and edged back into positive territory for the year.
Will the Christmas cheer continue on the other side of the official holiday? That is the question on the mind of participants paying attention to the equity market this week.
So far the Santa Claus rally period, which covers the last five trading days of the year and the first two trading days of the new year, is off to a good start.
The S&P 500 gained 0.9% last Friday in a remarkably light day of trading -- and by light we mean light. NYSE volume totalled a measly 434 mln shares.
Today isn't expected to be a whole lot busier, yet with the extended weekend having passed without any geopolitical incident of magnitude and the market showing some holiday verve, the activity should pick up some from Friday.
If the futures market is any indication, though, it could be a slow start.
Currently, the S&P futures are trading 0.3% below fair value, pointing to a slightly lower start for the cash market.
There isn't any market-moving corporate news, as today's headlines are mostly company-specific in nature, like Sears Holdings (SHLD) saying its total same-store sales have declined 5.2% quarter-to-date and that it will close 100-120 Kmart and Sears Full-line stores.
The economic calendar is populated with two releases -- the Case-Shiller Home Price Index for October at 9:00 a.m. ET (Briefing.com consensus -3.0%; prior -3.6%) and the Consumer Confidence report for December at 10:00 a.m. ET (Briefing.com consensus 58.0; prior 56.0).
The confidence number will provide a trading catalyst, the impact of which will be dictated by the proximity of the reported number to the consensus estimate.
Elsewhere, China's stock market had another poor outing. The Shanghai Composite declined 1.1%, leaving it down 22.8% for the year, reportedly on concerns about weak industrial profits and a possible need by China's largest banks to raise capital to accommodate tighter regulation.
The yield on Italy's 10-year note is sitting uncomfortably at 7.00% in front of an attempt to sell EUR 22 bln of bills and notes at auction on Wednesday and Thursday. What happens there could be a spoiler, or a sweetener, of the Santa Claus rally in the U.S. equity market.
--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.
