Judging from the close of Monday’s trading session, there looks to be enough fuel for a Santa Claus rally to end 2021. The Standard & Poor’s 500 closed up 1.38% and the Dow Jones Industrial Average gained 0.98%. The NASDAQ Composite was ahead by 1.39% and the small cap Russell 2000 was higher by 0.89%.
Stocks rose today, December 10, as a huge jump in CPI inflation exactly matched economists’ projections. As they say on the basketball court, “No surprise; no foul.” The Consumer Price Index (CPI) climbed at a 6.8% annual rate in November.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My seventy-eighth YouTube video “Look Out for Earnings Season” went up today.
With the VIX “fear index” falling back closer to “normal” levels–it dropped to 21.89 yesterday from 31.12 on December 1–it sure feels like the extreme volatility of the end of November and early December is on the ebb. The move to yesterday’s 21.89 close from December 1 was was a surge of 30% in the CBOE S&P 500 Volatility Index in a week. This move away from panic follows on a jump in the “fear index” in the week from November 24 to December 1 of 67% in the opposite direction. I’d be surprised if we don’t see another surge in volatility in the rest of December or in January with what promises to be a crazy earnings season, but even if volatility holds at something like today’s level–slightly elevated from the historical averages but in the rough ballpark–don’t forget that volatility has a long tail. Volatility, in fact, creates volatility. And not least of all in individual stocks.
Here we go again. It’s not that we really have any more information about the Omicron Variant–we certainly don’t know what its effects will be on global economic acuity–but just as fears that the Covid-19 variant would send the world back into lockdown crushed stocks last week, this morning, December 7, a belief that Omicron won’t be all that bad has taken root and stocks are soaring in morning action.
Even as losses accelerate for almost all stocks as we head into the close today–the Standard & Poor’s 500, which was down 1.31% at 2:30 In New York had moved to a loss of 1.74% as of 3:30–shares of Apple (AAPL) continue to hang onto the green.
Federal Reserve Chair Jerome Powell retired the word “transitory” to describe stubbornly high inflation in testimony today in front of the Senate Banking Committee. And, Powell continued, the Fed might accelerate the pace at which it is winding down its purchase of Treasuries and mortgage-backed assets. “It is appropriate, I think, for us to discuss at our next meeting, which is in a couple of weeks, whether it will be appropriate to wrap up our purchases a few months earlier.” The Fed is currently scheduled to complete its asset-purchase program in mid-2022
Today, Monday November 29, it’s a tale of two bounces from Friday’s big sell off. Technology stocks and especially big technology stocks are up big. At the close in New York Applied Materials was up 5.53%. Adobe (ADBE) was ahead 3.83%. Nvidia (NVDA) was higher by 5.95%. Amazon (AMZN) had gained 1.63%. Apple (AAPL) and Meta Platforms (AKA FB) were 2.19% and 1.47%, respectively. Qualcomm (QCOM) had gained 4.55%. Alphabet (GOOG) was higher by 2.32%. Microsoft (MSFT) had picked up 2.11%. NXP Semiconductors (NXPI) had climbed 5.41%. In most of these stocks today’s gains made up for Friday’s losses–or more. For example, on Friday Applied Materials had dropped 3.84% and NXP Semiconductors was down 3.88%. On the other hand, the “re-opening stocks” that got crushed Friday on fears that the Omicron Covid-19 variant would throw sand in the gears of the global economy showed only minor gains.
It was sure hard to see a market melt up today, November 22. The Standard & Poor’s 500 was down 0.32% and the NASDAQ Composite fell 1.26%. Market leaders in the melt up rally like Applied Materials (AMAT) and Microsoft (MSFT) were down 1.65% and 0.96%, respectively. And it was even harder to see the trend I thought might be on its way in my Friday, November 19 post “Forward into the past with tech stocks:We’re seen this market before.” The rotation into tech stocks that I saw on Friday turned into loses of 3.12% for Nvidia (NVDA), and 1.92% for Alphabet (GOOG.)
But I suggest that you take a look at Apple’s (AAPL) performance today
On November 15 in my post on what’s priced in and what’s not, I noted that an upsurge in Covid infections this winter wasn’t priced in. And that evidence of a new wave from Europe where infection rates have headed higher in what might be a preview for the winter in the United States could send stock prices lower. Well, yes indeedy. That exactly what happened today after the Austrian government announced a full lockdown starting on Monday, in response to surging cases of COVID-19. The lockdown will include both those vaccinated and unvaccinated, it will last for 10 days minimum, but could be extended for 10 days further. The fear is that Germany, which is battling its own higher rates of infection, is next.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My seventieth YouTube video “The rally narrows–or does it?” went up today.
