US stock recovery on Tuesday ‘hardly’ a sign of looming Santa Claus Rally

The major US benchmarks are moving higher Tuesday as stocks struggle to hold gains ahead of the Christmas holiday. However, experts say the small rebound is ‘hardly’ a sign that a Santa Claus Rally is on the way.

A Santa Claus Rally occurs when equities rise in the last five trading days of December and the first two of the new year.

Halfway through the session, the Dow Jones Industrial Average was up roughly 120 points, or 0.37%, while the S&P 500 and the Nasdaq Composite were both 0.25% and 0.23% higher, respectively.

Trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, Dec. 14, 2022. (Reuters/Andrew Kelly / Reuters Photos)

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Edward Moya, a senior market analyst for OANDA in New York told FOX Business on Tuesday, “US stocks are trying to snap a four-day losing streak, but the rebound is hardly a sign that Santa’s coming to town.”

“The Bank of Japan was the last key central bank domino to fall, and that’s sending yields higher, which will make it hard for investors to pile back into equities given the economy is clearly recession bound,” he finished.

The central bank decided to broaden the yield curve on its 10-year Japanese Government Bond. It expanded the range to 50 basis points on either side of its 0% target, a change from the previous cap of 25 basis points.

Federal Reserve

Photo taken on April 20, 2022 shows the US Federal Reserve in Washington, DC, the United States. (Liu Jie/Xinhua via Getty Images) / Getty Images)

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Last week, the US Federal Reserve remained committed to its interest rate hike strategy, moving them 50-basis points higher to cool inflationary pressures not seen in more than four decades. The Fed’s policy is expected to send the US economy into a recession.

As consumer prices continue to rise during the busiest shopping season of the year, retail stocks like Nike, Macy’s, Abercrombie, and Best Buy are all in negative territory on Tuesday with Best Buy taking the steepest fall at roughly 0.88% beneath the redline.

ticker Security load Change change %
BBY BEST BUY CO. INC. 79.80 +0.32 +0.40%

Meanwhile, travel stocks are mostly higher on Tuesday as holiday travel picks up with shares of Southwest, United, and Delta Air Lines all flying above the redline on Tuesday with only American Airlines trading in negative territory at a 0.16% loss.

ticker Security load Change change %
EEL AMERICAN AIRLINES GROUP INC. 12.48 -0.33 -2.58%

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