Lexington Park, MD – All December long, the stock market has shattered record after record—and not in a good way. But all those woes seemed to come to a halt following the Dec. 25 market break.
Leading up to Christmas, many economists and investors had been speculating that we had entered a downward spiral leading towards an overdue recession. Some speculation has listed this month as the most volatile December since that of 1931, during the Great Depression. Overall, most of the stock market has seen major losses.
The Dow Jones Industrial Average (Dow) had seen close to a 3,800 point drop this month—until Dec. 26 that is. With a 635-daily point drop on Christmas Eve, the Dow was getting dangerously close to nearing a bear market. A bear market is defined as a 20 percent drop from its highest point. These losses had originally been blamed on United States Treasury Secretary Steven Mnuchin, who to stabilize markets made calls to the major bank CEOs of J.P. Morgan Chase, Bank of America, Goldman Sachs and three others. Even though the banks spoke with confidence in their lending capacities, investors took Mnuchin’s calls as having a negative impact that brought down the stocks.
However, those historic Christmas Eve losses were wiped away after the Dow saw its biggest single-day points gain ever. With a 4.98 percent increase, the Dow saw a massive increase of 1,086.25 points, with the closing tally coming to 22,878.45.
Additionally, the Standard & Poor’s 500 (S&P 500), an index of 500 major company’s common stocks, saw major gains as well. With everything from tech stocks like Apple and Facebook, to consumer stocks like Nike and Kohl’s, to energy stocks like Hess and Marathon Oil each seeing significant positive recoups. The S&P 500 closed out Dec. 26 with a 116.60-point increase, bringing their closing value up to 2,467.70 points.
An important question to ask right now could be “Is a ‘Santa Claus rally’ going to save the stock market?” A Santa Claus rally is an unexplainable phenomenon that occurs on Wall Street when stock prices positively surge at in the final weeks of December.
With market volatility at a high right now, it is hard to determine what is to come in the following weeks. Following the massive gains of the day after Christmas, stocks plummeted once again early Dec. 27. After a rocky morning of falling close to 500 points, the Dow had recovered to a near 300-point loss by noon. Similarly, the NASDAQ and S&P 500 had seen big losses throughout noon Thursday.
At a time where many people hoped to see a Santa Claus rally raise stock values, it appeared that Wednesday’s trading may have been a misleading indicator. However, by the end of the Dec. 27, each of the previously listed stocks closed with significant positive gains. The Dow closed out gains of 260 points, while the NASDAQ and S&P 500 also closed out slight positive gains.
Although hard to predict what will come of the stock market in the upcoming weeks, one can hope that the gridlock coming to Washington in 2019 will help provide more consistency and predictability— not a recession.