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The S&P 500’s 70th record close of the year is now the second-highest ever for the index, pulling in gains for 28% of 2021.
The S&P 500 index registered its 70th record close of 2021 on Wednesday, inching up 0.1% to 4,793.06. Overall, the index closed at a record level of 28% of the time this year. 2021 also marks the second-highest number of record closes ever, trailing 1995’s 77 closing highs.
Meanwhile, the Dow Jones Industrial Average grew by an additional 90.42 points, or 0.3%, to close at 36,488.63. The prominent 30-company index registered its first closing high since November while also taking a six-day winning streak. However, the Nasdaq Composite was not so fortunate, ticking down instead by 0.1% to 15,766.22.
S&P 500’s 70th Record Gain Has Further Stoked Investor Confidence
Due to the current positive developments surrounding the S&P 500 and Dow Jones, investors look to finish the year on a high. The two indexes are closing in on their respective all-time highs, with the former returning over 27% in 2021. Furthermore, the Dow is up by more than 19% for the same period.
History has repeatedly shown that the market surges during December’s last five trading days and the first two of January. Termed the “Santa Claus rally,” there are numerous explanations for this phenomenon. They include tax considerations, a general feeling of optimism on Wall Street, and the investing of holiday bonuses.
Furthermore, there is also a theory that the absence of some large ‘sophisticated and pessimistic’ investors during this period also aids the rally. This is when the aforementioned players generally go on holidays, which leaves the market to more bullish retail investors. Whether due to market sentiment or other factors, the S&P 500 has been positive 79% of the time during the period since 1928. In addition, it has also registered an average gain of approximately 1.7% for the same period. This is further proof that the ‘Santa Claus rally’ is real.
Gary Schlossberg of Wells Fargo Investment Institute touched on the aforementioned rally period saying:
“The seasonals favor further gains in the market. The trading is a little thinner than it would otherwise be. … We’re coming off what seems to have been a good holiday season and I think that inspired some confidence.”
Winners and Underperformers
Notable gainers on the Dow were Walgreens, Nike (NYSE: NKE), and Home Depot (NYSE: HD), each rising by more than 1%. Meanwhile, biotech firm Biogen surged by approximately 9.5% to lead the S&P 500, following reports of an impending acquisition by Samsung. Reports say the deal is north of $40 billion, although Biogen declined to comment on this.
Conversely, travel-related stocks were the biggest underperformers. For instance, American Airlines and United Airlines dipped 2.6% and 1.9% respectively, while Carnival and Norwegian Cruise Line both finished lower. On the Dow, prominent American multinational corporation Boeing was the biggest loser, declining by 1.2%.
Despite the pervading Omicron Covid variant, the market is showing remarkable resilience. For instance, the S&P 500 is up 5% for December alone.