Stock Market Today: Dow Breaks Records as Santa’s Rally Continues

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Major stock indices were mixed on Tuesday, although the market had a better day than first appeared. Economic data showed that supply chain constraints are easing, continuing the momentum of the December Dow.

By the end of the morning,

Dow Jones Industrial Average
was up 234 points, or 0.6%, after the index closed Monday at a record high of 36,585. The

S&P 500
won initially, but then lost 0.1% after also closing at a record high in the last session. The tech-heavy

Nasdaq composite
fell by 1.7 percent.

While technology stocks dragged the indices down, most stocks rose. The Invesco S&P 500 Equal Weight Exchange-Traded Fund (RSP), which weighs each stock in the index equally and thus shows the movement of the average stock, gained 0.7%.

The Institute for Supply Management’s manufacturing index fell to 58.7 in December, falling short of expectations of 60, and falling from its previous reading of 61.1. But the latest report contained some encouraging signs.

The constraints in the supply chain are getting better. That means slower cost increases for companies, which in turn gives them less incentive to raise prices and contribute to inflation. The paid price index fell from 82.4 to 68.2. Delivery times from suppliers also decreased. “Supply chain pressures leading to longer lead times and rising prices may ease,” wrote Andrew Hollenhorst, Citigroup economist.

That gives more certainty that the Federal Reserve will not act too quickly in raising interest rates

Job opening data for November also added to that story. The number of job openings was 10.6 million, lower than estimates of 11.1 million and less than the previous result of 11.1 million, after a record 4.5 million Americans left their jobs. Fewer openings means companies are not looking for labor as hard as expected, which could slow the pace of wage growth and thus slow inflation.

The stock market reflected optimism about economic growth on Tuesday. Any indication that the Fed will be less aggressive in raising interest rates is an indication that economic growth could be higher, not lower. The more economically sensitive value stocks outperformed growth stocks by leaps and bounds on Tuesday. “Higher rates [Treasury yields] and economic hope helps,” wrote Andrew Brenner of NatAlliance Securities.

Higher bond yields indeed weighed on technology stocks. The 10-year Treasury yield rose to 1.68% after rising Monday from a closing price of 1.51% on Friday. Interest rates are the highest since late November, approaching the pandemic high of 1.75%. The higher yield reflects higher expectations for long-term inflation, which is bad for technology stocks that count on profits well into the future.

In general, the stock market has been in a good mood lately. The Santa rally, when the market rises in late December as people fund their retirement accounts and other holdings to hold more stocks at the end of the year, has continued into the new year. Over two trading days to start 2022, the S&P 500 is up 0.5%.

Overseas, London

FTSE 100
were up 1.6% as UK traders kicked off their first session of 2022 after a public holiday on Monday. In Tokyo, the

Nikkei 225
outperformed its Asian competitors, rising 1.8%.

Hong Kong

Hang Seng
index barely finished above the flat and the

Shanghai composite
0.2% down.

“The declines in China are a result of the continued expansion of lockdowns, with the city of Zhengzhou (the capital of Henan province) beginning a partial lockdown,” said Jim Reid, a strategist at Deutsche Bank.

On top of the Covid-19 pressure, China’s central bank has moved to drain liquidity. The People’s Bank of China cut its short-term cash injections on Tuesday, triggering the largest liquidity drop since October. Bloomberg reported.

West Texas Intermediate crude oil futures rose 0.7% to more than $76 a barrel, even after OPEC said it would increase production as the global economic recovery remains on track.

Here are six stocks in motion Tuesday:

After briefly hitting a $3 trillion market cap on Monday — the first public company in the world to reach that market cap —

Apple

(ticker: AAPL) fell 1.1% on Tuesday.

cruise line

Carnival Corp.

(CCL) rose 1% after a 6.4% jump Monday. Cruise ship inventories have generally increased despite Omicron’s impact on their operations, including an increase in the number of passengers in their fleet.

Despite agreeing to delay the rollout of a new 5G service by two weeks due to aviation safety concerns,

AT&T

(T) and

Verizon

(VZ) shares were resilient, rising 1.2% and 0.9% respectively.

solar power

The (SPWR) share gain was down 3% even after an upgrade to Outperform from Market Perform at Raymond James.

under armor

(UAA) shares gained 1% after an upgrade to Outperform from Neutral at Baird.

Write to Jack Denton at [email protected] and Jacob Sonenshine at [email protected]