27 Dec Market Faced Selling Pressure. 30 Dec Might See Rebound

During the holiday-shortened week, we saw the stock market registered gains. The "Santa Claus rally" period began on Tuesday, typically characterized by positive market trends, though not guaranteed.

Stocks fell sharply on Friday as the Santa Clause rally that kicked off earlier in the week came to a halt.

The Dow Jones Industrial Average closed 0.8% lower, snapping a five-session winning streak, while the S&P 500 and Nasdaq Composite shed 1.1% and 1.5%, respectively. The major indexes had closed near unchanged on Thursday after surging before the Christmas break.

Despite Friday's sell-off, the three major indexes managed to post slight weekly gains after losing ground last week. For the Dow, this was the first time in four weeks the index rose, while the S&P broke a two-week losing streak.

The market faced broad selling pressure on Friday, with the Dow Jones Industrial Average dropping over 500 points at its low and closing 333 points down. The S&P 500 fell by 1.1%, and the Nasdaq Composite declined by 1.5%. The retreat was marked by profit-taking as the year-end approached, and significant declines in mega caps impacted overall performance. The CBOE Volatility Index rose to 16.10, indicating heightened market volatility expectations.

Mega-cap technology stocks were down across the board on Friday, led by a 5% decline for EV maker Tesla (TSLA). Shares of AI investor favorite Nvidia (NVDA) fell 2%, while Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META) and Broadcom (AVGO) also lost ground. Apple entered the session on the verge of becoming the first company to ever have a market capitalization of more than $4 trillion.

Palantir have retreat to the safe zone after experiencing the sell-off, that might signal a good time to look at Palantir now, as we can see that it is still trading slightly above the VWAP.

I would expect Palantir to make a recovery to above $82 when market open today (30 Dec).

The yield on 10 year Treasurys, which is correlated with expectations about where interest rates are headed, was at 4.63% in recent trading, up from 4.58% yesterday and near its highest levels since May.

The economic calendar was light, with a notable weekly jobless claims report. Initial claims for the week ending December 21 were 219,000, below the consensus of 232,000.

Continuing claims reached 1.910 million, the highest since November 13, 2021.

Taiwan's Ministry of Science and Technology announced potential funding cuts exceeding $600M for semiconductor, AI, and aerospace projects by 2025. This move, driven by opposition parties reallocating funds to local municipalities, could impact international partnerships with companies like Micron (MU), Advanced Micro Devices (AMD), and Nvidia (NVDA), which have ongoing collaborations with the Taiwanese government.

In a geopolitical development, China imposed countermeasures on U.S. companies providing military aid to Taiwan, including Boeing's (BA) Insitu and RTX's (RTX) Raytheon units. These firms will face asset freezes in China following the U.S. President's authorization of $571.3M in defense support for Taiwan.

Rigetti Computing (RGTI) led gains among quantum computing stocks, surging 15% and amassing a $4.3B valuation despite modest revenue. Other quantum stocks like Quantum Computing (QUBT) and D-Wave Quantum (QBTS) experienced mixed movements, highlighting the sector's volatile nature.

Taiwan Semiconductor (TSM) began mass production at its first Japanese plant, focusing on mature chip technologies. The company plans to expand its facilities in Japan to produce more advanced chips, reinforcing its position in the global semiconductor market.

Microsoft (MSFT) continues to explore AI models for its Copilot products, maintaining its partnership with OpenAI while integrating various AI technologies to enhance its software offerings.

I am expecting the market to form a recovery today (30 Dec) to help S&P 500 and NASDAQ to close 2024 with a positive significant gains.

Appreciate if you could share your thoughts in the comment section whether you think market would make a last minute dash to close 2024 with a significant gains.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.