3rd Day Christmas rally - Mag 7 or AAPL only ?
12 Days of Christmas song - 3 French Hens
Trading on the first post-Christmas day saw the followings happening:
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Dow Jones Industrial Average closed fractionally higher on Thu, 26 Dec 2024, stretching its winning streak to 5 sessions despite light trading volumes.
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S&P 500 were broadly unchanged, ending its run of 3 sessions winning streaks.
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Similarly, the Nasdaq Composite also remained largely status quo, and it also snapped its's 4 session run of higher closes.
When official trading ended at 4pm: (see above)
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DJIA: +0.07% (+28.77 to 43,325.80.
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S&P 500: -0.04% (-2.45 to 6,037.59.
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Nasdaq: -0.05% (-10.77 to 20,020.36).
The above begs the question - “is the Christmas rally over” ? I certainly hope not !
In my Thu, 26 December 2024 post (click here ! to read, Repost to share), I have mentioned that 2 economic reports (US weekly jobless claims & US 7-year note auction) would be released.
Luckily not to a lot of fanfare.
US Weekly jobless claims.
For the week ending 21 Dec 2024, the number of Americans filing new applications for jobless benefits dipped to the lowest in the December month, consistent with a cooling and still healthy US labour market.
Unemployment benefits fell by -1,000 (-0.45%) to a seasonally adjusted 219,000 according to the Labour Department report.
Economists polled by Reuters had forecast 224,000 claims for the latest week. (see below)
The level of new benefits claims was in line with its average over the last year of just over 220,000, with little indication of moving higher as layoffs remain muted.
However, the same could not be said about duration of unemployment.
Latest data showed that those who have lost work are:
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Finding it harder to find a new job.
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Remaining on benefits rolls for a longer stretch.
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Pushing up the ranks of those collecting unemployment benefits for more than the first week.
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The “bad” news in November is people were unemployed for an average of 23.7 weeks.
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This is the longest period of unemployment since April 2022, that averaged less than 20 weeks.
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Unemployment has been gradually increasing in recent months.
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In April 2024, the average unemployment duration was less than 20 weeks.
As we head into 2025, weekly tracking of unemployment duration becomes increasingly important to detect possible slump in US economy as early as possible.
US 7-Year Note Auction.
In an event twist, investors responded to yields on US government bonds inching higher, including the yield on the benchmark 10-year Treasury note, hitting its highest since early May at 4.64% earlier in the session.
A strong auction of seven-year notes early in the afternoon though helped yields come off slightly, with the 10-year note at 4.58% in late-afternoon trade.
Higher yields are traditionally seen as negative for growth stocks, as it raises the cost of their borrowing to fund expansion.
Another report that deserves closer attention from now onwards.
Magnificent 7 on 26 Dec 2024.
According to LP Financial, Chief technical strategist, Adam Turnquist:
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Looking back, the Mega cap tech stocks’ prices dipped marginally during 2024’s summer.
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Investors wanted to put money into other areas they thought were a better deal.
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However, after the US elections in November, these Mega cap stocks started rising again.
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They even performed better than the average company in the S&P 500
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Based on technical analysis, what an investor should look out for are breakouts in (a) absolute terms and (b) relative terms.
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The Magnifcent 7 is checking the boxes there, so very constructive leadership going into the year-end.
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The three main indexes have hit multiple record highs in 2024, on (i) hopes of a lower interest rate environment and (ii) the prospects of artificial intelligence boosting corporate profits.
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However, US stocks have hit a speed bump this December, as investors assess the Fed's projection of fewer interest rate cuts in 2025.
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Looking ahead, Thursday’s dip just might be the start of cracks forming momentumL
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To see further benchmark index increases, will need input from other sectors of the economy.
On a day where 6 of 7 magnificent seven saw varying degrees of pull back, $Apple(AAPL)$ defied sentiments and rose instead. (see below)
I wonder if Mr Buffett harbours a tinge of “regret” (now), for off loading $Berkshire Hathaway(BRK.B)$ ‘s stake in Apple earlier on ?
To be fair, shares of the maker of iPhones, iPads and other products have appreciated by +9.91% over the course of the past month, outperforming the Computer and Technology sector's gain of +5.93% and the S&P 500's gain of +1.05%.
The positive sentiments is largely due to investors cheering progress in AAPL's long-awaited AI enhancements to rejuvenate its sluggish iPhone sales.
According to Maxim Group, Analyst - Tom Forte:
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Latest rally reflects “investors enthusiasm” for AI and an expectation that it will result in a supercycle of iPhone upgrades.
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Valued at about $3.85 trillion as of the last close, Apple dwarfs the combined value of Germany and Switzerland's main stock markets.
Trillion dollar run.
The Silicon Valley firm, driven by the so-called iPhone Supercycles, was the first US company to hit previous trillion-dollar milestones.
In recent years, AAPL has attracted criticism for being slow to map out its AI strategy, while its peers eg. $Microsoft(MSFT)$, $Alphabet(GOOG)$, $Amazon.com(AMZN)$ and Meta Platform (META)$ have pulled ahead to dominate this emerging technology.
All that changed when it was announced on 19 Dec 2024 that AAPL will finally add ChatGPT to its flagship product - the iPhone.
Regardless whether the new addition / collaboration will rake in sales, investors sort of went berserk and there was no looking back. (see below)
The rest like they say is history.
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Do you think the remaining 6 of 7 Magnificent 7 will recover today ?
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Do you think AAPL will continue to fire up and close higher again today ?
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