Markets regain holiday cheer in year-end dynamics

After a day in negative territory, markets have regained holiday cheer, with all three major U.S. indices staging a rally on Thursday. The S&P 500 recorded a 1% gain, with market participants buying up dips in the Tech sector. The immediate cause seems relatively straightforward, with yesterday’s sell-off appearing more about a cohort of speculative algorithmic machines running for cover than any macroeconomic concerns, all the while the Fed rate cut beat goes on.

Key highlights included a substantial 8.6% surge in shares of memory-chip maker Micron, driven by the company’s issuance of more optimistic guidance for the current quarter than initially expected. Additionally, with U.S. yields experiencing a decline, the stage was set for yet another round of dip buying, resulting in a “Magnificent 7 rally.”

If recent trends hold, stocks are poised for an upward trajectory in the typical “Santa Claus Rally.” However, given the substantial gains that have already transpired, investors may find themselves content with the early Santa stocking stuffer rather than risk the proverbial lump of coal if the US PCE data comes in hotter than expected.