Market Perspective for December 23, 2019

Equities extended their gains on Monday after China cut tariffs on pork and technology imports. The Dow Jones Industrial Average increased 0.34 percent. The S&P 500 and NASDAQ gained 0.09 and 0.23 percent, respectively.

Crude oil held steady at $60.64 on Monday, but SPDR Energy (XLE) rallied 1.01 percent. Independent oil producer Apache (APA) rose 17.46 percent after announcing a 50-50 offshore oil joint venture with Total SA. SPDR Industrial (XLI) advanced 0.76 percent after Boeing (BA) fired its CEO. Boeing shares climbed 2.91 percent. SPDR Healthcare (XLV) returned 0.37 percent. SPDR S&P Pharmaceuticals (XPH) increased 1.95 percent and SPDR S&P Biotech (XBI) 1.05 percent.

Stocks are entering a seasonally strong period. The final four trading days of December and the first two of January are historically very positive for stocks. This six-day period has seen stocks rise 76 percent of time since 1896, versus only 55 percent for the average six-day period. The average gain has been 1.49 percent over the “Santa Claus Rally” period, more than 10 times the average of all six-day periods.

New homes sales missed expectations, but November’s annualized pace of 719,000 was higher than October’s pace. iShares U.S. Home Construction (ITB) fell 1.12 percent on the day. The only other economic data scheduled this week is the weekly initial unemployment claims.

The 10-year Treasury yield climbed to 1.94 percent on Monday. Corporate, investment grade, floating rate and high-yield bond funds all advanced on Monday, let by the 0.05-percent gain in iShares iBoxx High Yield Corporate Bond (HYG). iShares 20+ Year Treasury Bond (TLT) slid 0.15 percent.

Note: The stock market will close at 1 PM on Tuesday and will re-open on Thursday.

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