You don't have to believe in Father Christmas to know that the Santa Claus rally is real.
Gains in this period can be seen as more than a nice year-end bonus. It also sets up the market for the rest of the following year.
First observed in the 1970s by Yale Hirsch in his seminal Stock Trader's Almanac, the Santa Claus rally is usually defined as what happens to the S&P 500 in the last five trading days of December and the first two of January. This year, that means the period from now until Friday, Jan. 3.
Just look at the data, which are compelling. Since 1950, the market has risen approximately 80% of the time in the seven-day window. And even though the S&P has already gained more than 25% this year, there's no reason to think it can't edge up a little higher now.
There are plenty of theories for why this happens. Maybe it's just good cheer. Maybe it has to do with thin volumes and the fact that institutional investors are taking time off, leaving the trading to retail investors who are more likely to buy than sell. It's impossible to rule out that there might be a little holiday magic involved, too.
Another possibility is the stock market, when left alone, tends to go up. There are very few scheduled events over the next few weeks--weekly jobless figures on both Thursdays and Case-Shiller house prices on New Year's Eve are the highlights. The Santa rally could just be a reminder of why the stock market isn't like a casino--when you invest, you're more likely to win than to lose.
There are, of course, still risks. Surprises always have the potential to steal Christmas gains, and an unguarded post from President-elect Donald Trump, or signs of retail gloom in the shopping malls would be all it takes. But as the market settles down for a "long winter's nap," investors should have visions of sugar plums dancing in their heads, at least until everyone returns to their desks.
-- Brian Swint
*** The Barron's Daily will be taking a holiday break. It will next publish Friday, Dec. 27, 2024.
***
Netflix Faces Christmas Day Test of Live Event Streaming
Netflix's push into live sports is about to get serious as it prepares to show two NFL games live on Christmas Day, complete with appearances from pop superstars Mariah Carey and Beyoncé. This comes after a glitch-ridden attempt at streaming last month's boxing match between Jake Paul and Mike Tyson.
-- There are risks. It's nearly four times as expensive to air an NFL
matchup as it is to make a hit series like Netflix' "Squid Game." And
Netflix will find itself competing in livestreaming against cash flush
Big Tech giants. Some 60 million households tuned into the Paul-Tyson
bout.
-- Adding live sports could also help Netflix bring in more money from
advertisers at the expense of rivals such as Walt Disney and Comcast.
Oppenheimer & Co. analyst Jason Helfstein sees a $2.2 billion advertising
opportunity for the company from live events. But Netflix will need deep
pockets.
-- It is paying $150 million to broadcast the Christmas NFL games and it
will also air at least one festive game in 2025 and 2026, The Wall Street
Journal reported. Amazon paid $11 billion to air Thursday Night Football
for 11 years and $1.8 billion annually to air NBA games.
-- Netflix has to livestream without the glitches it had last month, when
many people couldn't access the boxing fight. Typically, Netflix makes up
11% of North American internet traffic, the Journal reported, citing web
use tracker Sandvine. During the fight it was 39% for one internet
provider.
What's Next: Netflix's early internal estimates project that the football games could draw as many as 35 million concurrent streams globally but it is prepared for more, the Journal reported. Christmas is usually one of the top days of the year for internet usage, the report said.
-- George Glover and Liz Moyer
***
Nordstrom Family Strikes Take-Private Deal for Department Store Chain
Members of the Nordstrom family are getting their take-private after several attempts, teaming up with Mexican department store operator El Puerto de Liverpool to buyout shareholders at $24.25 in cash for each share. The family will retain just over half the ownership.
-- The $4 billion deal comes after previous attempts by the family,
including talks that started in June 2017 but were suspended that October
and an $8.4 billion take-private proposal by the family the following
year that a special committee rejected.
-- The Nordstrom family proposed an acquisition in June 2017, but the
transaction was suspended the following October. The family then
attempted to take the company private in 2018, though the $8.4 billion
offer was swiftly rejected by a special committee formed to review the
bid.
-- Nordstrom's market value peaked around $15 billion a decade ago, but
since then the stock has floundered as department stores lose customers
to online sellers and discounters. Activist investors have pushed other
retailers to separate their real estate holdings.
-- Separately, the Consumer Financial Protection Bureau sued Walmart and
fintech firm Branch Messenger, accusing the retailer of forcing delivery
drivers to use costly deposit accounts to get paid and deceiving the
drivers about how to access their pay. Walmart and Branch denied the
allegations and said they would defend themselves in court.
What's Next: The Nordstrom deal is expected to be completed in the first half of 2025, and will represent an enterprise value of $6.25 billion including debt. Regulators and two-thirds of Nordstrom shareholders have to approve it.
-- Mackenzie Tatananni and Liz Moyer
***
MicroStrategy Bought More Bitcoin and the Stock Dropped
MicroStrategy, the world's largest corporate holder of Bitcoin, bought another $561 million of the cryptocurrency in the past week, continuing a string of weekly purchases that began in early November. It was the smallest weekly purchase over the span.
-- According to a securities filing Monday morning, the company funded the
latest purchase with equity sales of $561 million under an
"at-the-market" program of sales.
-- The latest buys were far below the $1.5 billion announced on Dec. 16 and
the $2.1 billion disclosed on Dec. 9. MicroStrategy paid an average of
over $106,000 per coin for the latest purchase, made between Dec. 16 and
Sunday. It now holds 444,262 Bitcoin worth about $43 billion.
-- The company has sold more than $14 billion of stock since then and
another $3 billion of convertible debt to fund Bitcoin purchases.
-- Shares fell 8.8% on Monday, which was also the first day it traded as a
constituent in the Nasdaq 100 index.
What's Next: The relatively small recent equity sales could indicate that it is getting harder for MicroStrategy to find new investors after completing large stock sales over the past two months. The company didn't immediately respond to a request for comment.
-- Andrew Bary
***
-- Newsletter edited by Liz Moyer, Brian Swint, and Rupert Steiner
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 24, 2024 06:54 ET (11:54 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
