A Mild Santa Clause Rally

Weekly Market Commentary - 12/31/2021

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Financial market action in the final week of the year was relatively muted. A mild Santa Clause rally did ensue as seasonal factors such as rebalancing and window dressing kicked in. Investors got a full dose of coronavirus news as the Omicron variant continued to spread rapidly. The CDC announced that asymptomatic people could reduce isolation time to 5 days from 10 days and is also expected to include the cohort of 14-15-year-olds for eligibility to receive a booster shot. Still, many flights were canceled due to the virus, and New Year’s festivities were curtailed, giving some pause to the reopening trade.

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The S&P 500 gained 0.9% for the week and closed the year 26.9% higher. The Dow added 1.1%, the NASDAQ declined by 0.1%, and the Russell 2000 rose by 0.2%. Trading in the US Treasury market was quiet, the yield on the 2-year note increased four basis points to 0.73%, and the 10-year yield increased by two basis points to 1.51%. Oil prices increased by $1.53 or ~2%, with WTI closing at $75.15 a barrel. EIA oil inventories showed a larger draw than expected at 3.58 million barrels. Gold prices increased by $16.2 to close at $1828.10 an Oz. Copper prices increased by 1.5% or $.0694 to $4.463 a Lb. Bitcoin tumbled 8% on the week and closed the year at $47,052.

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Economic data was positively skewed for the week. In the labor market, Initial Claims and Continuing Claims trended lower to 198K and 1.716m, respectively. The S&P Case-Shiller index increased 18.4% in October, while Pending Home Sales decreased 2.2% in November. Finally, the Chicago PMI rose to 63.1, better than the consensus estimate of 61.5.

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Darren Leavitt, CFA

Chief Investment Strategist

With over 20 years of experience in the market, Darren bring a diverse background with multiple areas of expertise. Throughout his career, Darren had held a variety of senior positions including Chief Investment Officer, Chief Financial Officer, Portfolio Manager, Senior Analyst, Senior Trader, and Financial Advisor.

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