Stock Markets: Holiday cheer uplifts markets

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Striking distance
U.S. markets rose Tuesday as investors returned after the Christmas holiday, with the S&P 500 within striking distance of its all-time high and the Nasdaq 100 gaining 0.6% to close at a record high. Asia-Pacific markets traded higher Wednesday. Hong Kong’s Hang Seng Index jumped 1.54% as video-game stocks surged, while Japan’s Nikkei 225 followed close behind, gaining around 1.2%.

New game?
Hong Kong-listed shares of NetEase, Tencent and Bilibili rebounded Wednesday after Chinese authorities announced they would “carefully study” the concerns of stakeholders on new gaming rules. On Friday, Tencent lost about $43.5 billion in market value after China announced draft rules aimed at curbing excessive gaming and spending.

Uneven AI boom
Apart from Nvidia, other technology stocks have attracted Wall Street’s attention in the race to profit from artificial intelligence. Software vendors CrowdStrike, HubSpot and Salesforce at least doubled in price this year. But the Chinese cloud services sector isn’t seeing rapid growth, according to market analysis firm Canalys, even as investments into its AI sector, which is expected to fuel cloud growth, rise.

Rebooting PC sales
The slump in personal computer sales is likely to end next year, according to analysts. Canalys “expects the PC market to grow 8% in 2024 as … new AI-capable devices emerge,” according to a Dec. 20 report. HP CEO Enrique Lores’ similarly enthusiastic over AI fueling PC sales, telling CNBC AI-capable computers will “double the growth of the PC category starting next year.”

[PRO] Bullish “golden cross”
A “golden cross” pattern happens when a stock’s 50-day moving average rises above its 200-day moving average. Wall Street views it as a bullish event signaling short-term momentum’s picking up. Indeed, these eight stocks have rallied by an average of 15% every single time they experience a “golden cross,” according to CNBC Pro’s analysis.

On Tuesday, all 11 sectors of the S&P 500 rose, pushing up the index 0.42%. The S&P closed at 4,774.75, less than 1% away from its record close of 4,796.56 set in January 2022. All eyes are now trained on when the S&P will reach a new high.

Other major indexes were also suffused with the Christmas spirit. The Dow Jones Industrial Average rose 0.43% and the Nasdaq Composite climbed 0.54%. The Russell 2000 Index, typically seen as an indicator of economic sentiment in the broader economy, did even better, gaining 1.24% to hit its highest level in more than a year.

“I don’t love the term, but if you were to describe what is happening it’s definitely Goldilocks for the market,” said Jan Szilagyi, CEO and co-founder of Toggle AI. “Inflation’s coming down, the economy is still chugging along, and the hiking cycle’s over. On all of these macro trends, the rally has been justified.”

Adding to the sense of anticipation in the air, former Dallas Federal Reserve President Robert Kaplan told CNBC on Tuesday he expects the central bank to start cutting rates soon.  

“One of the reasons we got into this inflationary problem is the Fed stayed way too accommodative for too long, even as the economy was improving, and I don’t think it wants to make the same mistake on the flip side, where it stays too restrictive,” said Kaplan. 

The danger of rates staying too restrictive is that “the lagged impacts of rate hikes will get the economy,” according to Wolfe Research’s chief investment strategist Chris Senyek. That might result in something else “break[ing] in the system,” as Komal Sri-Kumar, president of Sri-Kumar Global Strategies, put it.

For now, however, Santa’s still spreading holiday cheer. Data from the Mastercard SpendingPulse indicator suggests retail spending, excluding autos, climbed 3.1% this holiday season from last year. That’s a sign the consumer’s still strong, and the U.S. economy — and, indeed, financial markets — may still have presents under the tree going into next year.