Santa Rally Begins on Wall Street: Stocks Surge, Tesla Soars, Bitcoin Reaches $98,000

The highly anticipated Santa Rally season got off to a strong start on Wall Street, with big gains across major indices supported by powerful gains in consumer discretionary and technology stocks. This all goes down during light trading times leading up to the Christmas holiday.

Major Indices End on a Positive Note

The S&P 500 gained 1% for its third straight day of gains as it recovers from last week’s tumultuous Federal Reserve meeting. The Dow Jones Industrial Average rose 0.9 per cent, but the tech-heavy Nasdaq 100 led the way to nearly erase those losses with a 1.3 per cent gain.

The standout performers this week were the consumer discretionary stocks, which kept their reign as the best-performing sector of the year. Notably, the SPDR S&P 500 ETF Trust (NYSE: The Invesco QQQ Trust Series (NASDAQ: QQQ), which tracks the Nasdaq 100, jumped 1.3% to $529.94 and SPY rose 1.1% to $601.01.

Individual Stock Gains Tesla Leads

Tesla Inc. (NASDAQ: TSLA surged 7.35% to a record close and was up 7.35% for its biggest single-day rise since November. Electric vehicle giant’s rally helped push the broader market gains, analysts said the company was keen to back on growing in the long term.

Other notable performers included:

• Walmart Inc. (NYSE: Strong holiday retail sales bolstered WMT up 2.4%.
• Starbucks Corp. (NASDAQ: Consumer spending trends continue and shares of SBUX) climbed 2.8%.
• Netflix Inc. (NASDAQ: International markets optimism drags NFLX up 2.5% (rose).

Cryptocurrency Market Joins the Rally

The cryptocurrency market saw a significant boost in risk appetite, with Bitcoin (CRYPTO: In fact, BTC jumped 4% to surpass $98,000. The rally in Bitcoin lifted crypto-related equities such as MicroStrategy Inc. (NASDAQ: Along with MSTR (NASDAQ: MARA) and MARA Digital Holdings Inc. (NASDAQ: MARA), Coinbase Global Inc. (NASDAQ: COIN) all recorded notable gains.

The surge is being driven by surging investor confidence in digital assets after the likes of institutional adoption continue to materialise.

Sectoral Performance: Consumer Discretionary Leads

The Consumer Discretionary Select Sector SPDR Fund (NYSE: But other sectors underperformed XLY (which was up 2.3%). In contrast, the Utilities Select Sector SPDR Fund (NYSE: A modest 0.5% gain for XLU fell short behind the group.

Tesla and Starbucks are key contributors to consumer discretionary rallies; Walmart’s strong holiday sales help retail equities.

Stable Treasury Yields and Commodity Markets

Treasury yields also were mostly steady; the 10-year benchmark yield at 4.6% held at its highest level since May. The Euro dropped against the U.S. dollar index, which was close to one-year highs.

Gold pushed up 0.4% in the commodities market supported by continued demand as a hedge against inflation, and oil prices climbed 0.7%  amid optimism over a global economic recovery.

ETF and Index Performance Overview

The rally extended to popular exchange-traded funds (ETFs), reflecting the broader market’s upward momentum:

• SPDR Dow Jones Industrial Average ETF (NYSE: DIA) rose 0.8% to $432.44.
• iShares Russell 2000 ETF (NYSE: I WM) gained 1% to $223.46.
• Small-cap stocks showed strength as the Russell 2000 Index itself rose 0.8%.

Factors Driving the Santa Rally

1. Seasonal Trends:

During a collectively known Santa Rally phenomenon, the negative performance of the periods before traditionally gets turned over into positive figures for the traditional Christmas season due to investors’ hope, lighter trading sessions, and good economic indicators.

2. Consumer Strength:

The back half of 2019 has been robust for consumer-facing companies, as discretionary spending showed strength, despite broader economic uncertainties.

3. Cryptocurrency Resurgence:

Bitcoin’s rise illustrates that sentiment concerning digital assets is buoyed by rising confidence in digital assets, including institutional interest and relative blockchain adoption.

Investor Sentiment and Outlook

Wall Street cheers the current rally, but analysts warn about watching it. There is a chance that we see a pullback as investors absorb the Federal Reserve’s monetary policy stance and macroeconomic data into the new year.

Diversified portfolios and profits from overbought sectors are reasons for longer-term investors to focus on.

Santa Rally Boosts Markets

Wall Street has received a Santa Rally wave and major indices are experiencing strong gains, Tesla a leading stock, Bitcoin nearing $100,000. Just as the end of the year approaches, investors are reminded to strike a balance between short-term gains and long-term strategies to be prepared for whatever comes next year.